Buyer’s Credit Interest refers to the interest charged on a loan provided by a financial institution to a buyer for purchasing goods or services. This type of financing is commonly used in international trade, where a buyer may not have the immediate funds to pay suppliers.
In this arrangement, the financial institution extends credit to the buyer, allowing them to make a purchase while deferring the payment to a later date. The buyer then repays the loan over time, often with interest. The interest charged is typically based on the loan amount and the repayment terms, influencing the overall cost of the purchase.
This financing tool is relevant in various scenarios, particularly in import-export transactions, where it can facilitate trade by enabling buyers to obtain necessary goods without upfront capital. It helps to manage cash flow, allowing businesses to maintain liquidity while still engaging in large transactions or investments.
