Buying on margin, Installment Buying: What is it?

[Lost In Translation]

The title is quite self-explanatory.

So, what is it?

[BobKKKindle$]

Buying on margin is taking out a loan to fund the purchase of stocks, on the expectation that the price of the stock will increase shortly after the purchase takes place, allowing the loan to be re-payed, and generating a profit for the investor. This practice was common during the 1920s and was one of the factors which led to the collapse of the stock market and the subsequent economic depression, because it acts as a linkage between individual investors and financial institutions. Installment buying is paying for a consumer good in a series of installments (not as a single purchase) and so enables low-income consumers to gain access to good which they might not otherwise be able to afford.