In-house financing means a business lets customers pay over time itself, instead of sending them to a lender. The business carries the balance and collects each payment. Under Regulation Z, a business can become a creditor if it regularly extends consumer credit that has a finance charge, or that is payable by written agreement in more than four installments, not counting a down payment. Regularly means more than 25 times a year, or more than 5 for credit secured by a dwelling. General information, not legal advice.
What is in-house financing?
In-house financing is when the business selling something also lets the customer pay for it over time. There is no bank or finance company in the middle. The customer agrees a schedule with the business and pays the business directly.
The business is the one waiting for the money. It decides who gets a plan, sets the schedule and collects each payment.
Is a payment plan the same as a loan?
Not always. Regulation Z, which implements the Truth in Lending Act, defines credit as the right to defer payment of a debt, or to incur debt and defer its payment. A plan defers payment, so it can be credit. Whether the business then counts as a creditor under Regulation Z depends on the plan's terms and how often the business offers it.
When does Truth in Lending apply?
Under 12 CFR 1026.2(a)(17), a creditor is a person who regularly extends consumer credit that is either:
- subject to a finance charge, or
- payable by written agreement in more than four installments, not including a down payment
and to whom the debt is first payable.
"Regularly" has a number. A person regularly extends consumer credit if they did so more than 25 times in the preceding calendar year, or more than 5 times for credit secured by a dwelling. If the business didn't reach that in the last year, the current year counts instead.
| Plan | Finance charge? | Installments after the deposit | Can Reg Z treat it as credit? |
|---|---|---|---|
| Deposit plus 4 payments | No | 4 | Not on the installment test |
| Deposit plus 12 payments | No | 12 | Yes, if offered regularly |
| Any plan with a finance charge | Yes | Any | Yes, if offered regularly |
If the business is a creditor, Regulation Z's requirements apply to it. The rule has more detail and exceptions than this table shows. See Truth in Lending Act and finance charge, and talk to counsel about your own plans.
What risks does the business carry?
With in-house financing, the business carries the balance:
- Non-payment. If a customer stops paying, the business is the one owed the money.
- Collections. The business follows up on missed payments itself, or pays someone to.
- Cash flow. Money arrives over months instead of at the sale.
- Compliance. If the plan counts as credit, meeting Regulation Z falls on the business.
How does it compare with a third-party lender?
With a third-party lender, the lender pays the business and the customer repays the lender. The lender carries the non-payment risk and deals with collections. The customer's relationship for that debt is with the lender. Lenders set their own approval rules and interest.
With in-house financing, the business keeps the customer relationship and the terms. It also keeps the risk and the work. Neither choice is right for every business. It depends on how much risk the business can carry, what its customers can qualify for and what terms it wants to offer.
Every figure on this page was checked against these sources on Oct 6, 2026. General information, not legal or tax advice.