Should a private seller accept payments over time from a potential buyer?
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Although a private seller might be able to design a contract that would help protect their interest when selling goods such as used appliances, furniture, cars and the like, there are several reasons why requesting that the buyer pay cash might be best.
If a seller intends to accept partial payment, it is imperative that the contract be put in writing with all the details, including the item to be sold, the price, the quantity, the date, and the name of the purchaser and seller. A private seller who intends to use such a contract as protection from never being paid should also get identifying information that will help to collect from the buyer should they fail to pay, such as the buyer's social security number and driver's license. If the seller can't even locate the buyer, it would be very difficult to retrieve the property or payment, and it would be much more expensive to file a lawsuit.
The fact is, though, even with a contract in writing and signed by the buyer, it might be difficult to collect payment on items sold. The problem is that filing a lawsuit is expensive, and the costs of hiring a lawyer are often too high to warrant suing to recoup losses; even if you won the lawsuit, you likely would spend more on legal fees than you won. Also, winning a lawsuit doesn't guarantee you'll ever even be able to collect the amount you are owed. If the purchaser is insolvent and simply doesn't have the money to pay you, you might find it difficult to collect even if your state allows you to place a lien on the buyers home, wage garnishment, or attachment of other property such as funds in a bank account.
These types of collection techniques are complicated and can be very expensive, and don't guarantee that you will ever actually get the money you have coming to you. The best thing to do to be sure you are protected and don't end up unable to collect is to avoid the problem of extending credit to buyers completely. Instead, ask the buyer if they might get a personal loan from the bank or elsewhere. If the bank isn't willing to extend credit, and the potential buyer is unable to secure a loan from even a friend or family member, you as a seller should think twice about extending credit as well. The bank, friends and family members of the would be purchaser probably know something about the person you don't. Save yourself the frustration and loss, and avoid falling into this trap.