If you sell retail goods or services, especially higher-priced items, you may want to consider offering payment plans for customers. If you do, you must have the customer sign a retail installment sales agreement.
This agreement outlines the terms of the contract so that the customer knows specifically what the expectations are. The law requires that you include certain elements, and it also prohibits certain charges.
General information about retail installment sales agreements
According to the Ohio Laws and Administrative Rules, a retail installment sales agreement is not the same thing as a lease-purchase agreement; rather, it is a contract outlining details of installment payments for sales of goods or services. The Attorney General of the State of Ohio states that retail establishments can use RISA for automobiles, home improvement services, furniture, health spa services, swimming pools and burial blots.
Required elements in the contract
Having a retail installment sales agreement clarifies payment expectations for the consumer and makes it easier for the owners of the retail establishments to take legal action if the consumer is not making the required payments. The requirements for each agreement include:
- Cash price of the goods purchased
- Down payment amount, if applicable
- Principle balance and remaining balance owed
- Finance charge amount
- Cost of insurance, if applicable
- Total amount the consumer owes, due date and amount of each payment and the number of installment payments
Both parties must sign the agreement, and the retail establishment must give the consumer a copy of the agreement.
There are certain charges a creditor cannot put in a retail installment sales agreement. One is excess charges for late payments, and the other is attorney fees for document services.