NDSU Extension Service - Ramsey County

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Layaway or Not?

Layaway or Not?

 

          Layaway used to be a common purchase practice for big ticket items as consumers were earlier not readily offered credit for purchase.  Layaway is an agreement between a retailer and a consumer in which the consumer pays a deposit to reserve an item, which the retailer holds till it’s paid in full. The customer has to commit to a period of time during which he will pay the full amount. As the retailer holds the item for the customer, and agrees not to sell it, the customer is assured that it will be available later.  If the customer fails to pay in full, money is refunded after deducting a small fee.

          Layaway plans first became popular during the Great Depression but as consumers got more and more access to credit cards, its popularity diminished. The economic downturn though has meant consumers are on the look-out for anyway to stretch a dollar and retailers are looking to increase sales.  Layaway is back.

          If you are a savvy consumer and you're good at this type of money management, layaway is a great deal.  Paying small increments of money over a period of time or for some layaway agreements, not having to pay anything for 90 days is great. As a typical layaway plan has minimal or no fees, it becomes less expensive than carrying a balance on a credit card. Just be sure you have the money at the end of the agreement to avoid penalties or losing your hold on an item.   

          Layaway is like a saving plan for the item you want to buy. Only the money has to go for the purchase of the chosen item and not be used somewhere else. Your monthly layaway payment moves you into the habit of saving.  Another advantage is that layaway prices remains fixed:  Even if you take six months to a year to pay, you will not have to pay a higher price.  A definite downside to layaway is that there may be transaction or cancellation fees, so check policies. Online payment services like Google Checkout and PayPal are working with retailers to offer holiday rebates and discounts -- some up to 30 percent.

          An alert consumer will ask the seller how much time you will have to pay for the item; when payments are due; what minimum payment is required; and what charges, if any, are added to the purchase price.

Ask about the store's refund policy before you buy and get it in writing.

Ask the seller to identify your merchandise in writing to ensure that you will receive the exact item you are purchasing.  Lastly, keep your own record of your payments in case there is a discrepancy between your and the seller’s records.

 

 

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