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Down Payment

A percentage of the total purchase price of an item that is proffered when the item is bought on credit.

In an installment sales agreement, a buyer is required to pay part of the total price, usually in cash, and later pays the balance through a number of regularly scheduled payments.

A down payment is sometimes known as earnest money, or a sum of money that a buyer pays upon entering a contract to indicate a GOOD FAITH intention as well as an ability to pay the balance.

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