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Simple English definitions for legal terms
usance credit
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A quick definition of usance credit:
Usance credit is a type of letter of credit that allows the beneficiary to receive payment at a later date, usually after a certain period of time has passed. It is a promise made by a bank to pay the beneficiary on behalf of the customer, as long as certain conditions are met. This type of credit is often used in international trade, where the buyer and seller may not be in the same country and need time to complete the transaction.
A more thorough explanation:
Usance credit is a type of letter of credit that allows the beneficiary to receive payment at a later date, usually after a specified period of time. It is also known as a time letter of credit.
For example, if a company in the United States wants to buy goods from a supplier in China, they may use a usance credit to pay for the goods. The supplier ships the goods and presents the necessary documents to the bank, which then pays the supplier. The company in the United States then has a specified period of time to pay back the bank.
Usance credits are commonly used in international trade to provide a way for buyers and sellers to do business without having to pay for goods upfront.