Layaway is a purchase agreement that is beneficial to both the customer and the retailer. It allows the customer to pay for an item in instalments, and comes in handy whenever there is an item that is too pricey for you to pay at once. So how does it work? And what are the advantages of this payment method? Read Below to find out.
What is Layaway?
In this method of transaction, the retailer keeps the item reserved for a customer who is planning to buy it. The customer enters into an agreement with the retailer to pay the full price within a certain period of time.
Firstly, there is an initial deposit made by the customer as a down payment. And rest of the amount is paid in instalments. Once the full price is paid, the item can be then picked up. You can also enter a lay away online in which the item will be shipped or delivered to you.
What Happens when the Customer Fails to Pay?
Failing to pay the full item will result in the item to be returned to the shelf for selling again. This means the customer no longer has that item reserved and the item can be bought by any other customer.
Will the Customer Get the Money Back?
If the transaction is cancelled because the customer did not pay the full amount, the amount he/she already paid so far will be returned. However, there might be other conditions that apply to this refunding depending on the initial agreement between the seller and the buyer. For example, when refunding sometimes the seller might keep an amount as the storage fee.
How Does It Work?
While each agreement will have different conditions, the basics behind the layaway is the same. The customer usually picks a particular item in the store. If the item is in the list of items allowed for layaway terms, then he/ she can enter into a layaway payment agreement.
Once the item is picked, then the customer will have to pay a down payment as decided by the seller. Sometimes this is a fixed percentage of the full price. Sometimes it is any amount that is fair and affordable for the customer.
Then, the customer will enter into the payment agreement and law down the payment plan. The instalments maybe paid in a weekly, biweekly or a monthly method. This amount can depend in the price of the item as well as the income of the customer. Once the full price is paid, the customer picks up or get the item delivered.
Why is it Beneficial?
One of the benefits of this type of purchase is that there is no interest rate when making the payment. Due to this, layaway is cheaper than the usual instalment-based purchasing. The only additional price that the customer may have to pay is the storage cost.
It is also a great solution for anyone who is has a bad credit history or is undergoing financial challenges. All you need to provide is proof of identification and the initial deposit for the item.
Sometimes when we purchase goods, the costs are not always affordable. In such cases, this kind of an agreement allows a certain relief to the customers.