Economics becomes a science · 1770s–1920s
1856
Buy now, pay later: the installment plan
Singer sells sewing machines for a few dollars down and the rest in monthly payments.
A Singer sewing machine cost more than many families earned in months. In 1856 the company's partner Edward Clark offered them for a small down payment and regular installments, with the machine taken back if payments stopped.
Pianos, furniture and farm equipment soon sold the same way. Paying in installments made expensive goods reachable, at the cost of interest and the risk of losing the item.
💡 Why it made sense then
Buyers could use the machine to earn the money for it, and the seller kept a claim on it until it was paid off.
🎮 In Journey Shares
The car dealer and the farm co-op sell on daily installments: a down payment, then a fixed payment every day until it's paid.
Ideas it gave us
- 🏦 Interest rate
An interest rate is the price of borrowing money, stated as a percentage of the loan per year. For savers it is the reward for lending their money to a bank.
- 🏦 Collateral
Collateral is an asset a borrower pledges to a lender, which the lender can take or sell if the loan isn't repaid.
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Practise with $10,000 in play money
Free. No real money involved.