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Simple English definitions for legal terms
down payment
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A quick definition of down payment:
Down payment: When you want to buy something, sometimes you have to pay a little bit of money upfront. This is called a down payment. It shows that you are serious about buying the thing and it helps make sure that you will pay the rest of the money later. If you don't pay the rest of the money, you might lose the down payment.
A more thorough explanation:
A down payment is an initial payment made by a buyer to a seller when they agree to purchase something. This payment is usually a percentage of the total purchase price. The purpose of a down payment is to show the seller that the buyer is serious about the purchase and to provide some security for the seller.
For example, if someone wants to buy a car that costs $10,000, they might be required to make a down payment of $2,000. This down payment would be paid to the seller when they sign a contract agreeing to buy the car. The remaining $8,000 would be paid off over time, usually in monthly installments.
If the buyer fails to make their payments as agreed, the seller may be able to keep the down payment as compensation for their losses. On the other hand, if the seller fails to deliver the item as promised, they may be required to return the down payment to the buyer.
Overall, a down payment is an important part of many purchase agreements. It helps to protect both the buyer and the seller and ensures that everyone is committed to the transaction.