I just heard that Wal-Mart is discontinuing Lay Away. I guess this is supposed to cause problems for Christmas shoppers. I really don’t see how, but I really am not sure that I understand the concept.
I understand the basics of layaway. You pay a predetermined percentage of the price of the item at the start of the transaction. You must make regular payments or lose your items on layaway. You pay a fee for this transaction.
I have never used lay away before, so I may not have this 100%. The people that do use it state that they do so because they don’t have the money to buy the items then and there. So, a few dollars a month allows them to purchase things they otherwise could not afford.
Here is where I get confused. You have to pay for the service of layaway, so there is in reality a high interest charge on small transactions, not so much for larger purchases. There is also the gamble that you could have a financial setback and lose your layaway items after you have paid 70-80% of the price. Finally, the big thing is that the retail stores that allow layaway, generally don’t change their stocks that radically, that a savvy consumers could save a dollar or two each month and purchase the same item outright.
Help me understand the why behind this concept of layaway.
Lay away policies vary but often the firms that offer it do not charge a fee for the service, which is why many use it instead of credit card debt (K-mart charges $5.00). A customer who does not finish paying for the item does not lose what they have paid, but will often be charged a fee ($5.00 again at K-Mart) when they get their cash back or get store credit instead of cash.
The biggest risk for the customer is that the store goes bankrupt. They would then become a general unsecured creditor.
There is a site called layaway.com that is sort of a clearinghouse for lay away purchase.
I’ve never personally done lay-away. But back when I was a small girl, my mother used to lay-away clothes for back to school, and then Christmas items as well.
I’m supposing that the sales negated the cost of the interest, though according to mom, they weren’t high. And she didn’t have all the money on one lump sum, and while she was good at saving money up for things, it was easier for her to use the lay-away system.
My wife is a sucker for those ‘6 months, zero percent, same as cash’ deals. She’ll even refuse to shop at store ‘B’ if store ‘A’ has it. (Its why I sleep on a Sealy when I’d rather be sleeping on a down mattress…)
I think layaway’s time has passed, mostly because of the ubiquitous credit card.
I once used it as a teenager (3 centuries ago, I believe) when I saw a 35mm camera I just had to have for $100. There was only one like it in the store; I couldn’t afford to pay the price all at once, so I put it on layaway and came into the store whenever I had $10 to spare. Then one day, it was mine.
Most people didn’t have credits cards then, including anyone in my family, and certainly not someone under 18. My family had a charge account at the local grocery and the pet store where everyone knew us.
A big factor is that a lot of people will get some kind of bonus check in December that they’ll use to pay for the times they’ve put in layaway. If they waited until they actually had the money in hand to start shopping, some items might be sold out and stores would be more crowded.
We used it at Christmas when my son was small. Toys sell out pretty quickly during Christmas. So, we’d start a layaway in October then pay it off with the Christmas bonus.
I think Layaway was just the earlier version of credit cards. Used to be that every stored had a layaway plan; nowadays I’d be surprised if any of them do.
Indeed. Stores would much rather you use their own credit cards. They can move the merchandise faster, and the credit accounts are maintained by banks so they don’t have to keep track of things. Plus the interest is usually a lot higher than lay-away fees, especially on store cards.
Isn’t the store obligated to hold a item if you have put money down on it? like if I put $20 back in 1980 on a 8086 computer and make some regular payments, when I pay off the price of $2599.97 they should be ready to give me that bad boy.
I had no idea there was a service charge for lay away.
I saw it for people who just can’t save any money and neede dto be able to throw a few bucks at it at a time.
It’s also worth pointing out that there’s generally no credit check for layaway; I’ve known lots of people who had bad credit and couldn’t be approved for a credit card or a store credit account, who relied on layway for buying furniture and appliances.
People, as a general rule, are not good at delayed gratification.
Given non-linear cash flow and items likely to be sold out, it might make sense to use layaway rather than save up and purchase an item. The vast majority of people were probably just making the same poor financial decisions that people who carry balances on their credit cards do. Now that credit cards have effectively captured that market (and many stores have either their own credit card or a co-branded one), there’s not much need for layaway anymore.
I used to use lay-away all the time when my oldest daughter was a child but I haven’t in years. I probably still would if I ever got out enough to bother. I don’t care for credit cards so layaway is a great solution if I don’t have much cash on hand.
I always waited until clothing or linens went on sale, then put a couple hundred dollars worth in the lay-away. To me it was worth a few extra dollars to get that sales savings when I couldn’t afford to buy it all right then and there. Also for Christmas gifts because it kept my daughter from poking around the closets and finding her Santa presents.
I use it all the time, although it may be a little different here. There’s usually only a $2.00 service fee and the length of time an item may be put aside varies from store to store. If I cancel the lay by I get my money back, minus the service fee.
I like it because I refuse to buy things I can’t afford (ie credit card). I know I’m a dinosaur but I have no debt.
I used to work in the layaway dept. of a very busy Kmart in a Detroit suburb. It was unbelievable what kinds of things some people would put in there. Just everyday purchases like toilet paper, or one time many bottles of disposable douche.
Even more amazing were the people who used it as kind of a savings account. Always paying, never paying off, returning items, adding different items it was very weird.
Most people did use it for clothes, or toys or large purchases like patio furniture. I used it once for sale toys for Christmas For 2 dollars it was an easy way to hide them fom the kids.
Haven’t used it in years, but as a cash strapped young parents Mrs. Seenidog and I used it frequently (circa 1980). It was a great thing for us then. No credit, little money. We dealt with K-mart mostly. At that time there was no fee, no interest. You pay it off by a certain date or you lose it, and the money you already paid. The advantages to the consumer was you could get an item at sale price even though you did not have the money up front. And it sort of enforced financial disipline (which we had none of). The upside for the store was it locked the buyer into the sale, unlike if they were saving at home. Plus, the merchandise never left the store until it was paid for, so if the lay away buyer defaulted it could be sold as new and any money already paid was gravy. I think it had many advantages over credit cards, and was more fair that credit cards for many purposes. I see both layaway and credit cards as useful tools, but each is a better tool for certain things than the other.
I was 15 when I got my first job and obviously didn’t have a credit card.
There was an AWESOME electric blue leather coat at Danier that was $600 - there was no way it would be around for more than a couple of weeks (it was the '80’s, afterall). Obviously, I didn’t get $600 paycheques at my $4.10/hour/part-time after school sales job. I used layaway to get my coat.
FWIW, there was no fee at all. I believe I had 3 months to pay for my coat, and I think I actually got it in two.
It depends on the terms of the termsof the layway, they varied greatly. But if you really got screwed on that 8086, I am willing to sell you a functional in fine shape IBM Personal PC (81 vintage) with dual 5 1/4 " floppies,a 20 meg hard drive, and the original DOS disks and IBM mauals for say, a grand. I won’t charge extra for the CGA card and the 13" Princeton color monitor…
Just kidding, I wouldn’t ask more than 900 dollars for that bad boy.
Back to reality, every time I did a layaway the terms were very clear, you pay this amount every month, or you lose it. It will be paid off by this date, usually 90-120 days. You fail to make it, you forfeit all. Usually the minimum monthly payment was about half of what it would take to make the final payment schedule. I am sure they trapped a lot of people that way. But if you were aware of it, you could do well. Here in rural Wisconsin you were probably talking to someone related to your wife, and they made sure you understood. In today’s age of deception, credit cards are a much faster way to rip peoples faces off.
Shoot, I am tempted to go out tomorrow and put something on layaway just to keep the old ways alive.