Trade financing is essentially a method of buying materials, merchandise, or equipment on credit. Equipment manufactures and dealers know that the average small businessman is not financially able to pay cash for expensive installations and may have difficulty in securing local bank loans for this purpose. All major companies have financing plans to stimulate the sale of their equipment. Usually a down payment of from 20%-30% is required, the remainder to be paid in monthly installments over a period of 1-2 years or more. The seller is adequately protected by a chattel mortgage, conditional sales contract, or similar device, and carrying charges, although often not disclosed separately.
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