Usance LC

A usance letter of credit is a type of LC in which the buyer can make payment after delivery, within a stipulated grace period. Unlike sight LC, the buyer does not have to pay immediately to receive the documents. Usance LCs generally provide a 30, 60, 90, or 120 day window for payment. A usance LC is also known as a deferred payment LC or term LC.

In case of Usance LC/Deferred Payment LC, the buyer has a grace period of 30, 60, 90 or 120 days after receiving the documents to make the payment.

What is the meaning of Usance LC?

A Usage or Deferred Letter of Credit; means that even after the buyer has received the goods or services, the buyer gets a grace period to make the payment to the financial institution or the bank, that is, 30, 60, 90 or more days as agreed during the process.