Legal Definitions - time-price differential

Definition: Time-price differential refers to the difference between the current cash price of an item and the total cost of purchasing it on credit. It can also refer to the difference between a seller's price for immediate cash payment and a different price when payment is made later or in installments.

Let's say you want to buy a new laptop that costs $1,000. You have two options: pay for it in cash or finance it with a credit card. If you pay for it in cash, you'll pay the full $1,000 upfront. However, if you finance it with a credit card, you'll end up paying more than $1,000 due to interest charges. The difference between the cash price and the total cost of financing is the time-price differential.

Another example is when you're buying a car. The dealer may offer you a lower price if you pay for the car in cash upfront. However, if you choose to finance the car, the dealer may charge you a higher price due to interest charges. Again, the difference between the cash price and the financed price is the time-price differential.

These examples illustrate how the time-price differential can affect the total cost of purchasing an item. It's important to consider the time-price differential when deciding whether to pay for an item in cash or finance it with credit.