Here at Money4You, we’re everything about making your monetary life much easier. And with the vacations showing up, that indicates discussing how to pay for all those goodies without breaking the bank. So today, we’re going to talk about layaway plans.
Pros of Layaway Strategies
1. Interest-Free Purchasing
While layaway does come with costs, you won’t be charged interest on your purchases. That can save you a lot of money. For example, expect that you charge a $900 TELEVISION to a credit card with 18% interest. If you take 2 months to pay the total off, you’ll have paid one month’s interest, or $162. This makes the $5 service charge more appealing.
2. Availability of High-Demand Items
Layaway comes in handy throughout the hectic holidays when popular electronic devices and toys can sell out rapidly. Putting a popular product on layaway now guarantees you will have it for the holidays.
3. Offered Online
Some sellers offer layaway for online purchases. That saves you the annoyance of dealing with holiday season shopping, waiting in long lines, or going to a number of shops trying to find a popular product.
4. Easy Acceptance Criteria
Unlike a charge card, layaway programs do not carry out earnings or credit checks before approval. To be eligible for layaway you just require identification revealing that you are at least 18 years of age and enough money for the down payment. Hence, even people with previous credit problems can be eligible for a layaway program.
Cons of Layaway Plans
1. Postponed Gratification
Unlike the majority of purchases, layaway strategies require that you make payments for weeks, or sometimes, even months, before you get access to the product.
Merchants typically charge a cost to put an item on layaway, which is usually quite low. It might however be more than you would pay in credit card interest if you simply charge the merchandise rather, especially for lower cost items. Likewise, if you change your mind later on and choose to drop the plan, merchants will charge a cancellation or restocking fee.
3. Opportunity Costs
With layaways, in order to get your product paid off on time, you may need to start shopping in October, well in advance of a few of the very best sales and discounts of the holiday shopping season.
4. Losing Your Investment
In today’s tough economic environment, it’s not unusual for a retail chain to go bankrupt with little warning (recall CompUSA or Circuit City). If you have a layaway plan established at a store that winds up closing its doors, it will be tough to recover your product or your cash.
Can’t get a layaway? You still have options! An installment loan can help you get back on track.