Debt Relief Canada – The pros and cons of layaway plans
A few years ago, my boyfriend was looking for a used bicycle. After months of searching, he finally found one. However, it was just a little out of his price range.
He didn’t think he could find a similar one with all the features he was looking for, so he asked the shop if they would be willing to put it on hold for him in exchange for $200 a week paid over six weeks.
I thought it was an unusual request, but layaway plans have been making a comeback. This is especially true in the U.S., where websites like eLayawaymall.com offer layaway plans for over 1,000 retailers.
A layaway plan means you don’t get the instant gratification of taking the item home with you. You put an item on hold and pay the full amount through installments
Most layaway programs require you to put some money down on the item to hold it. Sometimes the amount is a flat fee, but it could also be as much as 10 to 20 per cent of the total price. You may face a service charge, or a cancellation and restocking fee if you decide to change their mind.
On the surface, layaway plans don’t make that much sense. It would be better to save for the item in full, and buy it without having to pay a service charge or risk losing your deposit. However, layaway can be a great option because you don’t risk that the item will be gone or sold out by the time you have saved enough money to buy it.
I have friends who wanted to attend the popular Coachella music festival – held annually in California. As students, they didn’t have the full $350 for each ticket and didn’t want to charge it to a credit card and pay interest.
Luckily, Coachella introduced a layaway program that allowed my friends to put down 20 per cent of the purchase price, and pay off the remainder balance through seven monthly payments.
If you see something you want to buy, before you grab your credit card, ask the store about layaway options. Even if they don’t have a program in place, asking about it might prompt them to create one in the future.
Here are five questions to ask if you plan on taking advantage of a retailer’s layaway option:
1. How much time do I have to pay off the item?
2. What happens if I miss a payment?
3. Can I get a refund if I no longer want the item?
4. What happens if the item goes on sale after I’ve put it on layaway?
5. What service plan fees are involved?
By Krystal Yee, blogger; Posted: November 21, 2012