If you want to buy something that you don’t have all the money for upfront, but don’t like the idea of using a credit card, one option to consider is layaway. Offered by many retailers, layaway allows someone to put an item on hold while they make payments over a designated time period. If you’re putting an item on layaway, you won’t be able to take it home until the item is paid in full, but doing so allows you to lock in a certain piece of merchandise that might otherwise sell out or increase in price. Before you decide to put something on layaway, consider the following tips:
Find out the fees upfront
Layaway is not usually free, so find out what the fees are upfront and compare it to your other options (such as using a credit card). You’ll also want to compare layaway fees if the item is available at multiple stores. Be sure to also ask about restocking fees if you change your mind. Some layaway programs might issue store credit, but others will impose a restocking fee that can range anywhere from 5 to 20 percent of the item’s sale price should you decide you don’t want it anymore. As such, you’ll want to be absolutely sure you want a particular item if you are going to put it on layaway. If you’re indecisive, you may want to consider saving up for the item instead.
Ask about sale pricing
You may think you’re locking in a good deal now, but what if the item goes on sale later? Some stores are willing to lower the price of the item while it’s on layaway to match the new sale price, but not all will. If the layaway program you were considering won’t match new sales prices, you might want to consider shopping around for one that does.
Have money for a down payment
You’ll usually need to make a down payment in order to put an item on layaway. Depending on the store’s policies, this might be a percentage of the item’s sale price, or it may a small flat-fee. Either way, you’ll want to know what the minimum requirements are. If possible, try to put down more money than what’s required. Your payments could be lower and/or you’ll end up getting the item sooner.
Have a repayment plan set in place
Once you pay to put an item on layaway, you’ll want to make sure you have a budget set in place that will allow you to make timely payments. Depending on the store, most layaway programs last between 8 and 16 weeks, and the item will need to paid in full once that time period is up. Make sure you know how long you have, how often payments will need to be made, and how much the payments will need to be. Restructure your budget and make sure that these payments will work with your other bills and liabilities, and do so before you make the commitment and put the item on layaway. It’s important to make sure ahead of time that you’ll be able to afford the payments; otherwise, you may end up losing the money you spent on the layaway fees, plus your down payment.
Do you need extra cash to make a large purchase? If you’re receiving long-term payments from an annuity or structured settlement, you may have other options besides layaway or credit cards. Instead, consider selling a portion of your payments and receiving that money sooner in the form of a lump sum.
Peachtree Financial Solutions can purchase some or all of your future payments, and provide you that money sooner. To learn more about receiving a lump sum of cash and to receive your free quote, contact Peachtree Financial Solutions today.
Nothing above is meant to provide financial or tax advice. You should meet with appropriate professionals for such services.