A payment of part of the purchase price that is made as part of a credit agreement is commonly known as a down payment. Down payments are typically required when purchasing high value items such as homes, vehicles, or appliances. While a credit agreement allows you to spread the cost of an item over a longer period of time, a down payment is required upfront to secure the purchase.

The purpose of a down payment is to reduce the amount of money that needs to be borrowed. In other words, the larger the down payment, the smaller the loan amount and therefore, the less interest that will accumulate over time. This makes the loan more affordable and easier to pay off in the long run.

Down payments can also help increase your chances of getting approved for credit. Lenders view a down payment as a sign of financial responsibility and a willingness to invest in the item being financed. It shows that you are committed to making the purchase and have the means to cover a portion of the cost upfront.

In some cases, down payments may be waived or reduced for customers with excellent credit or a long-standing relationship with the lender. However, in most cases, a down payment is required. The amount of the down payment will vary depending on the lender and the item being financed.

When making a down payment, it is important to ensure that you have enough funds available to cover the cost. This may require saving up for a period of time before making the purchase. It is also important to carefully consider the amount of the down payment so that you do not overextend yourself financially.

In conclusion, a payment of part of the purchase price that is made as part of a credit agreement is known as a down payment. Down payments are required upfront to secure the purchase and reduce the amount of money that needs to be borrowed. They also increase your chances of getting approved for credit and show a commitment to making the purchase. Careful consideration should be given to the amount of the down payment to avoid overextending yourself financially.