A payment plan is a financial arrangement in which an individual or business makes regular payments to fulfill a debt over time, rather than making a lump sum payment. This can be used for various purposes such as purchasing goods or services on credit, settling outstanding bills, or financing large expenses like education or home renovation. The plan usually involves setting up a schedule of payments with specific due dates and amounts, which helps the borrower to manage their finances better by dividing the total amount into smaller installments that are easier to handle. It also allows the lender to receive regular income over time instead of waiting for a single payment. Payment plans can be arranged through banks or financial institutions, as well as directly with merchants or service providers.