In this paper we examine the effect of consumer financing on the static difference in durable goods purchase among various income groups. We also investigate the role of credit in the dynamic adjustment of consumers to the change in their incomes. The empirical results suggest that consumer credit has the effect of significantly altering the probability of purchase among various income groups though without affecting the absolute amount of consumption expenditure on durable goods. Our findings also indicate that consumers adjust their durable goods purchase upward in response to an increase in their incomes but resist an adjustment downward when their incomes fall. However, it is installment credit which makes the adjustment upward and resistance to downward adjustment possible.