Definition
Layaway is an agreement in which the seller reserves an item for a consumer until the consumer completes all the payments necessary to pay for that item.
Layaway
What does ‘Layaway’ mean
Layaway is a purchasing method that allows a consumer to put a product on hold by placing a deposit on the item. Layaway allows the customer to make smaller payments on the product until the purchase price is paid in full, rather than paying for the item with credit and adding interest to the cost. A layaway plan ensures that the chosen merchandise will be in stock and ready for pick-up when the final payment is made.
Explaining ‘Layaway’
This method works for consumers who have a limited amount of disposable income and are unable to make larger purchases all at once. It also works to retailers’ advantage by allowing them to offer products to lower-income customers. Layaway can also be used as a savings plan; because the customer has already made a commitment to purchase the product on layaway, he or she can not give in to temptation to spend the money elsewhere.
Further Reading
- Optimal inventory decisions when offering layaway – www.tandfonline.com [PDF]
- Optimal inventory decisions for a risk-averse retailer when offering layaway – www.sciencedirect.com [PDF]
- The mobile phone as the tool to redefine savings for the poor: evidence from Kenya – www.tandfonline.com [PDF]
- The economic crisis, capitalism and Islam: The making of a new economic order? – www.tandfonline.com [PDF]
- Expert Available To Discuss Return Of Layaway Programs – scholars.unh.edu [PDF]
- Are low-income Canadians financially literate? Placing financial literacy in the context of personal and structural constraints – journals.sagepub.com [PDF]
- An economic analysis of the consumer bankruptcy crisis – heinonline.org [PDF]
