What is Layaway?
Layaway is an arrangement in which a retailer agrees to reserve a piece of merchandise for a customer who cannot immediately pay for it in full.
How Layaway Works
Layaway is a delayed payment method. A customer deposits a fraction of an item's price, and then the retailer stores the item for a specific period of time. The customer must pay for the item within an agreed time frame or else the retailer will put it back on the shelves for other customers.
For example, let's assume Bob wants to buy a $50 food processor at a Big Store, but does not have enough money. Bob decides to use the Big Store's layaway plan, instead. He deposits $10 with Big Store and they agree to hold the item for 10 days. Bob has 10 days to pay the remaining $40, and if he doesn't, Big Store will put the food processor back on the sales floor.
Why Layaway is Important
Layaway plans are good options for customers who don't have access to credit or who don't want to use credit. After falling out of vogue for many years, some stores are bringing layaway plans back as a way to attract cash-strapped consumers.