Seller-Financed Sale

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DEFINITION of 'Seller-Financed Sale'

A transaction where the seller also acts as the lender to the buyer. Seller-financed sales thereby eliminate third-party lenders from the transaction. This type of sale can be used to finance the purchase of a home, business or any other type of property.

INVESTOPEDIA EXPLAINS 'Seller-Financed Sale'

Seller-financed sales generally have no preset lending criteria that must be met; lending institutions do. This type of sale can provide more favorable terms to the buyer, but it may also entail greater risk for the lender. The IRS imposes a mandatory minimum interest rate on seller-financed sales of any kind, although the timing of interest reporting differs depending upon the type of property being sold.

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