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What is layaway?

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What is Layaway and what are its profs for customers?

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Layaway is an agreement between a seller and customer in the case when a customer wants to buy some product but doesn’t have enough money. Unlike a credit deposit, goods will stay in the store until a customer pays the full amount.

For example, Janet wants to buy some vogue clothes priced $100 but does not have enough money. The store can sell the clothes to her by layaway option. For this, Janett needs to make a $20 down payment, and the store will agree to hold this clothes for 15 days. During this time, Janet needs to pay the remaining $80. Only after she pays can the store give the clothes to Janet. If Janet does not pay, the clothes will be put back in the store showcase.

Layaway became common in the USA since the 1930s during the Great Depression. And nowadays, it supports many popular store chains like Kmart, Walmart, Marshalls, Toys "R" Us, and advantagesmore. Every store has their own layaway plan, and not all goods are supported by a layaway option. It is usually available for high-priced items like vogue goods, jewelry, electronics, etc.

 

Layaway advantages (for customers): 

• easy to use. A store doesn’t need to check customers’ credit history;

• opportunity to reserve high-demand products;

• for high-priced goods, the layaway plan fee is usually less than the credit plan fee.

 

Layaway disadvantages:

• need to make down payment before getting the item;

• many layaway plans have strict payment terms;

• (for the seller) during a long payment term, the customer may no longer want to buy the item.

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Now layaway option mostly was been replaced by purchase on credit, because for a customer is the most convenient way to get the product now and pay for it later. Wal-mart also had discarded layaway service in 2006, however, resume it in 2011.

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In Australia, layaway is called lay-by.

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