Understand Terms Before Buying on Layaway

layaway slip from store

Buying on layaway first came about during the Great Depression in the 1930s as a way for consumers to purchase items by making affordable, incremental payments. The customer puts down a small amount up front and signs a contract with the retailer specifying a payment schedule for the remainder. The customer does not get to take the item home until the full payment is received by the retailer.

With the rise of credit card use in the 1980s, many retailers discontinued their layaway programs; however, the economic downturn brought about a resurgence in this thrifty practice that your parents and grandparents knew so well. Stores such as Walmart, Toys R Us and Best Buy currently offer layaway plans, as do online retailers such as and

With good record keeping and a reasonable budget, layaway presents an opportunity for shoppers to make smart buys. Just make sure you do your homework before you sign that layaway contract this holiday season.

Tips for Using Layaway

  • For shoppers without savings or credit, layaway can be a good option. But before you proceed, first ask:
    • How much will I need for a down payment?
    • What is the payment schedule?
    • How much will each payment be?
    • Are there any additional fees?
    • What happens if I miss a payment?
    • If, at any point, I change my mind about the purchase, can I get a refund?
  • Layaway is good for buying something you’ll need in the near future—say a few weeks from now. It is not intended as a long-term payment plan. For example, if you buy $200 worth of presents for your children, make sure you can commit to paying off at least $40 each week.
  • Make a shopping list before you go to the store and be realistic in what you can afford to pay in full during the allotted time you have.
  • If you go to the store to make payments, get in and out. Don’t browse and shop for more items. Impulse items can wreck your budget.
  • Keep accurate and detailed records of your layaway contract, your purchases, and all payments that you make.
  • Make sure you understand the store’s sale policy regarding layaway items. If you put something on layaway that subsequently goes on sale, you may be able to renegotiate to get it at that sale price, but only if this is a part of your contract.
[Any reference to a specific company, commercial product, process or service does not constitute or imply an endorsement of recommendation by Smart About Money.]