Layaway is a payment strategy in which a customer places a deposit on an item to “lay it away” for later pickup. Layaway allowed shops to sell more expensive items to clients who were short on cash. When customers started using credit cards to pay for their expensive goods, layaway services started to become less popular. However, layaway experienced a return as shoppers became slightly more careful with their credit cards.
Several large stores now provide layaway option, especially during the holidays. However, layaway may not be the best financial choice for all consumers. If you are thinking of shopping for items and gifts using this payment scheme, read below to find out about everything you need to know about layaway, including how it functions and crucial factors, to assist you in determining whether this payment scheme is the correct choice for you.
What is Layaway?
When you use a layaway plan, you can pay for an item over time in interest-free payments. Usually in return for a down payment and/or a modest charge, the business retains the item for you until you finish the instalments then you are permitted to take your buy home once the balance is paid in full.
How does it work?
Although layaway plans and online layaway may differ significantly from retailer to retailer, they all generally have the same basic format. The normal layaway process starts with the consumer selecting an item they wish to place on layaway. Some retailers limit layaway to products that cost more than a certain amount or fall under specific categories, including jewellery, electronics, or furniture.
Some merchants may ask for a set portion of the overall purchase price, while others may let you decide how much to pay as a deposit. Different stores may have different layaway program lengths and payment schedule choices such as payments on a weekly, bimonthly, or monthly basis depending on the program and variables like the cost of the item. The majority of retailers demand full payment of layaway products within a year. Once the layaway item has been paid off, the customer can pick up the item at the store and take it home.
Are there any other fees aside from the deposit?
Aside from the deposit, the majority of retailers may charge one of the following fees if not all; service fee, cancellation fee and restocking fee. Most shops also want a service fee in addition to a down payment, to cover the cost of holding your item and handling several payments.
A store may charge you a cancellation fee if you cancel your plan or are unable to make all of the required payments by the due date. This might cost as much as $100 at some retailers.
Restocking fee: This is the fee that some stores might charge you since they are returning the layaway item again to the shelves in the hope that it will be bought by other consumers. This is to cover up for those missed chances of the item being bought by other customers.
Before you decide if this payment scheme is for you, you need to know that many layaway contracts have strict payment necessities. You risk losing your item if you skip a payment due to forgetfulness or inability to pay so make sure you are committed.