While the concept may not be as popular today, being able to layaway items was once a very big deal.

During times of great financial uncertainty, like the Great Depression, layaway made it possible for cash-strapped customers to buy pricier items and pay for them over a certain period of time. As credit cards became more popular to fund big-ticket purchases, layaway programs began to disappear. But today, as the economy continues to be uncertain and people are more cautious with their spending, layaway programs are making a comeback.

What is layaway?

Layaway is an interest-free payment plan that allows you to pay for an item in installments. You pay a deposit and/or a small fee, and the store agrees to hold the item until you finish making the payments. Once you pay the item off in full, you get to pick up your item and take it home.

How does layaway work?

Here’s how a typical layaway program works:

  • Select an item. Choose an item or several items you want to put on layaway. Some retailers may limit the type of products that can be put on layaway, or only provide layaway for items over a certain price or within certain departments, such as electronics, jewelry, furniture, or appliances.
  • Pay your deposit and/or service fee. Some retailers require a certain percentage of the total purchase price, while others may allow you to choose the amount you want to put down.
  • Make payments over time. Payment schedules and program lengths may vary between different retailers, so if you’re interested in layaway, be sure to ask about the store’s policy. Depending on the store, their program, or the price of your item, you may be expected to make weekly, biweekly, or monthly payments. Most stores require layaway purchases to be paid off in full within a year.
  • Bring your item home. After you pay off your layaway purchase, you can pick it up and bring it home.

What are the benefits of doing layaway?

There are several benefits to using a layaway plan, including being able to avoid incurring interest on credit card accounts and managing purchases without stressing out the household budget. Layaway helps shoppers easily afford expensive items that may currently be out of their budget. Because layaway customers are not charged interest, layaway becomes a more affordable option, especially compared to credit card purchases that may charge interest rates anywhere from 15 to 25% or higher.

Today, some retailers even offer convenient online layaway options. This may mean a customer physically selects items and initiates the layaway plan in person at the store, then makes regular payments online. Other retailers allow shoppers to select items and make payments through an online store or platform, and the retailer ships the items directly to the customer once they pay the balance in full.

Do you have to pay interest on layaway?

No, that’s what makes layaway programs so attractive for customers. You can plan for a big-ticket purchase and spread your payments out over time, without worrying about any interest charges. Buying items on layaway also helps you avoid racking up a huge credit card debt and late fees.

What happens if you don’t pay your layaway?

If you’re unable to pay the balance of your layaway program, or you change your mind and decide you no longer want the item, you can cancel your layaway plan. While your payments are likely to be returned, you’ll probably have to pay some additional fees. Most stores charge a cancellation fee, and some stores charge an additional restocking fee to put the items back on the sales floor.

Does layaway hurt your credit?

Not at all. Layaway plans have zero impact on your credit. Retailers that offer layaway don’t have to do credit checks to see if you qualify. Layaway plans do not show up as any kind of debt on your credit report. However, if you make your payments on time, remember that these also don’t show up on your credit report, so if you’re looking to build a positive credit history or improve your credit score, a layaway plan will not help.

Is layaway considered a loan?

No, a layaway program is not considered a loan. You do not have to meet any financial qualifications, submit an application, or pay any interest to participate in a layaway program. If you’re patient and don’t need the item in a hurry, buying it on layaway is a great way to purchase a quality, high-value item, spread out your payments and not worry about accruing interest charges on your purchase.

Why do people use layaway?

Layaway programs are especially useful when making large or expensive purchases for holidays, birthdays, or any other special occasions. Your layaway purchases are safely stored at the store or a secure warehouse, away from any prying eyes, until you’re ready to pay it off, pick it up, and take it home.

Do pawn shops offer layaway?

Some do and some don’t. Buying items on layaway at a pawn shop offers you even more flexibility and value. If you want to get a jump on your holiday gift shopping, or have your eye on an expensive watch, a cool antique, or a special piece of jewelry for yourself or a loved one, buying it on layaway at a pawn shop is a great way to get a high-quality item at a low price, making it a very affordable option.

Did you know  Gene’s Jewelry & Pawn offers layaway? We ask for 10% down and offer up to 10 months to pay off your item, free of charge. Get a head start on your holiday shopping today at Gene’s! Visit one of our three locations in the greater Charleston area. We know you’ll find unique items for every person on your list here at Gene’s.