Add Layaway to Your Negotiations Arsenal

Is Layaway the New Credit Card?

In case you don't remember layaway from your childhood, layaway is a way to purchase an item without paying the full price upfront. Instead of taking the item home and paying with a credit card or some other installment plan, the customer does not take the item home until all payments are completed. The customer pays a non-refundable fee upfront and has a payment plan to pay the amount due. It the customer does not pay all the installments, generally, the customer still gets a refund of payments made minus the nonrefundable fee and the item goes back on the shelf.

Layaway goes way back. People bought farm equipment and sewing machines on layaway. It was also popular after the Great Depression in the 1920's and 1930's. Some stores continued the tradition, but it had lost favor, probably because we have become a nation of people who want instant gratification and don't want to wait to actually get the item to take home. They would rather just use a credit card and get it over with.

But Layaway has made a comeback. Because so many holiday buyers are cash-strapped, many stores are bringing the concept of layaway back and many people are discovering it again. There are even some modern twists to it. There are now websites where you can pick out your item, sign up for a layaway plan, and when you are finished paying, your item will be sent to you.

What are the pros and cons of the layaway system?

Advantages:

1. You can reserve an item that may go out of stock such as popular Christmas toys.

2. You can avoid high credit card interest.

3. You won't have that holiday hangover with big payments after the holidays.

4. If you change your mind and don't pay all installments, you get your money back, minus fees.

5. You can shop early, but pay later.

Disadvantages:

1. Even with layaway, you still might not be able to really afford the item.

2. There is delayed gratification; this is more important to some than others.

3. If you pay your installments by credit card, you may still have high interest payments.

4. Maybe you could have gotten the item cheaper with post-holiday sales.

As in any transaction, Let the Buyer Beware. If you decide to use layaway ask yourself these questions:

1. With the present economy, can I really afford this item?

2. Can I get it cheaper elsewhere?

3. Can I wait and pay in full, therefore not incurring any fees?

4. Will I really get my money back if I don't make all the payments? Check the fine print on anything you sign.

5. Are you paying installments on credit cards and defeating the purpose of the layaway?

6. How much are the fees? Can I afford to lose them?

If used wisely, layaway can be an alternative to using your credit cards.

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Add Layaway to Your Negotiations Arsenal