Just What is Layaway Anyhow?

by Bill on February 29, 2012

It occurred to me yesterday after writing Monday’s post about seeking out and using layaways – does everybody know what a layaway plan is these days? A layaway plan, or installment plan, is a purchasing option used by retailers for consumers that don’t have the credit or cash available to purchase high ticket items. It is a way to help retailers gain more sales, and for consumers to gain items they would not be normally able to afford.

How Layaway Works

Basically, you go to a retailer that offers this service either themselves or through a third party vendor, pick out your wanted merchandise, make a deposit and then sign a contract to purchase. It’s like having credit, but very limited in that it is only for a specific item or items and for a very short period of time (usually 30 to 90 days). The payment amount is determined by both the time limits and the total amount of the purchase. Payments are planned at various intervals (weekly, bi-weekly, monthly and so on). The purchased item stays at the retailer until the item is paid for. Once paid, you can pick it up or arrange to have it delivered.

Read the Layaway Contract

Before you finish the initial transaction you are required to make a formal agreement to purchase the item according to the agreement terms. Make sure you read the agreement and understand what it says. Not all layaway plans are the same, nor are all equal to another.

Here’s a few things to watch for:

  • Return policies – you may only be allowed to return an item for the exact same item already in stock. You also usually have a limited time frame to return the item.
  • Late fees and missed payments – look for fees imposed if you miss a payment or are delinquent.
  • Price availability policy – if an item goes on sale while you have one on layaway, you may have to ask for the lower price.
  • Cancellations – you may loose part, or all, of your money paid into the agreement and the deposit.
  • Item Defects – usually the agreement states that you take responsibility for the item condition after so many days of taking delivery.
  • Shipping – most online layaways will pay for shipping, or tell you in advance if there is a shipping cost. Returns usually have shipping paid by the consumer in the original container.


Brief History of Layaway

Layaway plans were once common in the retail landscape well before the advent of easy credit. In fact, the layaway system of old was born from the Great Depression. Stores such as Sears, Kmart, Wal-mart, and many smaller stores utilized it to sell appliances, electronics, furniture and even jewelry. Most layaway plans started getting replaced or phased out by easy credit terms and the onset of everyone getting accepted for plastic in the 80s. In fact, the last two big stores to have it two decades later were Wal-mart and Kmart. Wal-mart stopped it just after the holiday season of 2006; which turned out to be a realized bad move and returned by 2011. Kmart was, and is still the only store that never did away with the layaway system (and they’re owned by Sears who did do away with it for a time). In fact, Kmart made full advantage of it with ads for a couple of years.

In the 21st Century the advent of online layways has allowed consumers to make use of this system anywhere they have computer and internet access. The only drawback is you allow access to your checking or savings account, and thereby the account is debited a certain amount at a specific time frame. If you are comfortable handing out this information, this isn’t a problem. The other advent of online layaways is the third party handler. These are companies that handle the process of creating the layaway between the retailer and the consumer. I don’t know anything about these, but I would check them out before dealing with one.

So that, in a nutshell, is what the layaway system was and is now. For those of you dealing with the stress of not having enough cash on hand to buy stuff outright this could be worth looking into. For those of you with lots of debt, this should be something to consider; if nothing else to cut down your dependance on debt.

Questions? Comments? Anyone? Anyone? Beuler? Beuler? Anyone seen Mr. Beuler?

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