Considering a Layaway Purchase? Read This "With so many Americans still struggling financially and reeling under credit-card debt, layaway is likely to be an even more attractive alternative to pay for gifts this holiday season. If you're unfamiliar with the layaway process, here's how it works." [Consumer Reports Money]
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Comments:
Seriously, just learn to save. Oh wait, forgot, this is America. We LOVE paying fees for NOTHING.
@Kamidari: Maybe it's on sale, and you want to lock down the price. Maybe it'll be gone in 30 to 90 days. Maybe it's being discontinued.
Back in the dark days of history when I was a poor student layaway was free. With all the service fees it isn't quite the great deal it used to be.
It used to be a useful tool if you really wanted to grab something before they were all gone but didn't have all the money up front.
Layaway is great for things like jewelry, which tends to change stock often. I shopped for months for an engagement ring for my wife (this was 17 some odd years ago) and when I finally found the one that I knew she would like, it was just a wee bit out of my price range (based on what I had saved up). 90 days ensured that I got the ring, and gave me time to save up the difference.
The big difference back then was, layaway was free.
@Oranges w/ Cheese wants it to be winter already:
From the article: If you're unfamiliar with the layaway process, here's how it works: You enter into a contract and make an initial deposit based on a percentage of the purchase price, along with a service fee to administer the plan and keep the item in storage.
@pecan 3.14159265: exactly! it might be the only way to get Turbo Man for your kid this year
Tickle me Elmo was the big thing when i still worked retail. buy it on layaway was often the only way to be sure to get one if you didn't have the money right now
hrm, i can understand not allowing layaway on beer/wine, perishables or potentially dangerous things like pool chemicals and gas additives.. but seriously kmart - no personal computers?
i can imagine that disappoints a lot of people
@pecan 3.14159265: I guess I can see people using it for that. I'm crazy enough to not buy stuff if I don't have the money, though. ;) I guess if it's really only a $5-$10 fee, it wouldn't be crazy to use it for a large item, anyway... Cheaper than charging it if you're going to pay interest.
@catastrophegirl: I would imagine they'd have a problem with people putting computers on layaway, getting it out 3 months later, returning it and getting a newer, cheaper model, leaving them with the out-of-date stock. Technology changes too fast I guess.
@morganlh85: @catastrophegirl: I haven't seen a Kmart selling any kind of computers in years so I doubt that is an issue.
Say you put a $100 item on layaway for 90 days and pay a $10 service charge, or 10% of the cost. This is the equivalent of paying 40% interest on the item. Instead, you use a credit card at 20% interst to pay for the $100 item and pay it off in 90 days. Total interest charges = $5. The break even point is $200. It's more if your interest rate is less.
Moral: unless it's something that's really expensive or you can't trust yourself to pay off the balance on your credit card, it's a better deal to pay with plastic.
@Kamidari: I'm like you, I tend not to buy things when I don't have cash in hand. Therefore I really can do without credit cards and there are few occasions where they would make things easier for me. Layaway, however, is a godsend.
I wear a hard-to-fit style and size, for example, and it's one that tends to sell out quickly. If I can shop while things are available (which is far into the season before they'll be needed), and lay them by while I make payments on them, I am assured of having clothes that fit when the time comes to wear them.
Layaway also helps me control my spending. If I had a credit card, I might be more susceptible to the "I have to have it right now" demon. Layaway gives me an incentive to ask myself whether I really need something and whether it's worth waiting for.
@kewlfocus: That's all very nice if no emergencies ever happen to you that eat your savings just before you have to make a purchase of something that you can't even get later, like clothes in season before they sell out. You must have a super calm life.
@unpolloloco: Honestly, the fees (so long as they aren't extortionate) are so worth it compared to the hassle of credit cards. And I would pay for a 100 dollar item up front if I needed it. My layaway purchases, (one to three a year) tend to be for things like a winter wardrobe or a mattress set, somewhere in the five to nine hundred dollar range. Compare the credit card interest for that amount against a ten dollar service fee and see where it gets you.
@catastrophegirl: The down payment and penalties for not completing a transaction would have to be massive, they depreciate too quickly. It would be a bad idea for the buyer anyways.
If you need to take 3 months to get enough money, save it in the mattress and you will get a better computer.
I have never bought anything via layaway. It may just be good luck but when I save up for something, the price of the item has usually dropped by the time I have the money. Either that or a newer, fancier model is out but at the same price I was going to spend on the original. Most of my big ticket items are electronics though so maybe its different for other things.
I don't get the appeal of this at all... Why not just wait 30-90 days and buy the thing, minus the fees. At least buying on credit, you get the item now.