A layaway plan is a purchasing method where a consumer places a deposit on an item to “lay it away” and reserves it for future pickup once the remaining balance is paid. Unlike immediate purchase methods, layaway plans cater to consumers who prefer or need to budget their payments over time without using credit.
History of Layaway Plans
Early Adoption and Popularity
Layaway plans were first introduced during the Great Depression era as a means for consumers to purchase goods without immediate full payment, thus stimulating sales for retailers and allowing consumers to budget their spending more effectively.
Evolution and Resurgence
The advent of credit cards in the mid-20th century led to a decline in layaway usage. However, layaway plans have seen a resurgence during economic downturns as consumers look for debt-free alternatives to purchase goods.
How Layaway Plans Work
- Selection of Item: The consumer selects the item they wish to purchase.
- Deposit Payment: A deposit is paid, and the item is set aside by the retailer.
- Scheduled Payments: Regular payments are made over a specific period.
- Final Payment and Pickup: Once the balance is fully paid, the consumer picks up the item.
Benefits of Layaway Plans
- Budget-Friendly: Allows consumers to spread payments over time without incurring interest, making it easier to manage finances.
- Avoids Debt: Provides an interest-free alternative to credit cards and loans.
- Planned Purchases: Encourages disciplined purchasing decisions and saving.
Companies Offering Layaway Plans
Several retailers and companies offer layaway plans to accommodate different consumer needs. Some notable examples include:
- Walmart: Offers seasonal layaway plans for various items, especially during holiday periods.
- Kmart: Provides both in-store and online layaway options with flexible terms.
- Burlington: Specializes in layaway options for clothing and home goods.
- Sears: Enables consumers to use layaway for a wide range of products, including appliances and electronics.
Comparisons to Other Payment Methods
Layaway vs. Credit Cards
- Interest-Free: Layaway plans do not charge interest, unlike credit card purchases.
- Debt Avoidance: Consumers can avoid accumulating debt with layaway plans.
Layaway vs. Financing
- No Credit Check: Layaway plans typically do not require a credit check, making them accessible to consumers with varying credit histories.
- Ownership: Consumers gain ownership only after full payment, whereas financing allows immediate use of the item.
Special Considerations
- Cancellation Policies: Many retailers have specific policies regarding the cancellation of layaway plans, often involving fees.
- Service Fees: Some layaway plans may include service fees or administrative charges.
Related Terms
- Installment Payments: An alternative payment method involving scheduled payments over a set period, similar to layaway but often includes interest.
- Deferred Payment Plans: Payment plans allowing consumers to defer payments for a period, sometimes involving interest post-deferral.
FAQs
Q1: Can I cancel a layaway plan?
Q2: Do all retailers offer layaway plans?
Q3: Are there any fees associated with layaway plans?
Summary
Layaway plans are a versatile, budget-friendly alternative to immediate purchases and credit-based payment methods. Understanding their benefits, historical context, and how they compare to other payment options can help consumers make informed purchasing decisions. As economic conditions fluctuate, layaway plans remain a valuable tool for managing personal finances responsibly.
References
- Retail Layaway Policies. (2023). Consumer Reports.
- History of Layaway. (2022). National Retail Federation.
- Economic Benefits of Layaway Plans. (2023). Journal of Retailing and Consumer Services.
