Do I have to keep paying on an installment loan if the item I purchased breaks?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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Installment loan contracts are contracts created by a finance company for the purchase of items from retailers. Typically, installment loan contracts are used for larger purchase items such as refrigerators and other appliances as a means of encouraging consumers to make the purchases outright and pay small monthly payments with tacked on interest.
Most states require that installment loan contracts are put into plain English. This means that the contract must be simple to understand and not contain any complicated legal or business terminology. Some states also require that the contract use a specific size of print. This ensures that the installment loan contract is easily readable and contains no fine print provisions. If your contract violates either of these standards, you may be able to seek a refund from the finance company.

A good rule of thumb is to avoid installment loan contracts whenever possible. Most financial advisers will recommend keeping a $200 to $400 emergency fund account in the bank for unexpected appliance replacements. If you do need to sign an installment loan contract, make sure that it contains a provision about defective products. If it does not, request that the provision be placed into the contract. This ensures that if the product is defective, you can seek a remedy from the finance company.

If you have purchased an item and it turned out to be defective, although you most likely will not be able to seek a remedy from the finance company without a provision about defective products in the contract, the retailer will most likely return the defective appliance and replace it with a working one. If you have kept the sales receipt, then this transition should be even smoother. If the retailer refuses to help, then you will need to contact the manufacturer. Many manufacturers offer assistance if the defective part was recalled, or may be able to send you a specific replacement part to fix the problem.

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