What You Need To Know About Stores With Online Layaway Programs
Layaway – a way to buy something without paying for it all at once with cash or using a credit card – has been around for hundreds of years. It became very common during the Great Depression, when much of the lower and middle classes were short on cash, and then it practically disappeared in the 1980s when the masses started using credit cards.
Credit cards charge interest, of course, and most layaway plans have never done that, so retailers didn’t have much use for them, and they were happy to end the need to store layaway items and to pay bookkeepers to keep track of those items.
However, the severe recession that hit five years ago and the years of economic sluggishness that have followed have ushered back layaway plans, most recently Internet layaway plans, which retailers hope to use to attract customers, particularly those who may not have credit cards, who may value living within their means and who may want a gift they buy to be safely hidden from the recipient.
Besides attracting new customers, the retailers – or in this case, e-retailers – like online layaway plans because many of them collect fees and may end up keeping payments if the customers can’t afford to keep making payments. What’s more, online layaway items typically remain at distribution centers until they’re paid for rather than taking up valuable space at stores.
Here are five sites where online shoppers can buy things on layaway:
At Kmart, all items are not in the layaway program. Kmart shoppers browsing on the store’s website need to look out for a note that says “Available for Layaway.” Then they must call their local stores to see if they stock the items they want to buy. If they do, the shoppers should select the items they want to buy and click on the layaway option before checking out.
Shoppers make a down payment of $15 or 10 percent of the purchase price, whichever is greater, as well as a $5 service fee to layaway their purchases for eight weeks. They must finish paying for the items in four payments over those eight weeks. If they can’t, they receive a seven-day grace period. If they still can’t, they must pay a $10 cancellation fee, and their money, with the exception of the service fee, is returned. A shopper who buys something that costs $300 or more may opt to pay over 12 weeks and pay a $10 service fee.
After they pay in full for the item, they must go to the store to pick it up. Having to do this, sort of defeats the purpose of shopping online, but Kmart sells the service by pointing out that using the layaway plan means customers will not go into debt to buy what they want.
Sears and Kmart are both owned by Sears Holding Corporation, so the stores have nearly identical online layaway policies. One difference is Sears shoppers can opt to pay over 12 weeks if they buy something that costs $400 or more. The other very obvious difference is Sears shoppers pay at www.sears.com/layaway, and Kmart shoppers pay at www.kmart.com/layaway.
Like Kmart, Sears requires shoppers to pick up their purchases at a store. Despite the inconvenience, Sears pats itself on the back for offering a “unique” program, saying, “Online layaway programs are just beginning to really get started, and once consumers realize how convenient they are, they're sure to get more widespread.”
A growing number of e-retailers that sell through Ebay offer online layaway plans. The terms vary greatly. Some allow buying on layaway for purchases of as little as $30 while others require purchases of $500 or more. The stores that have small purchasing limits often do not refund any money if shoppers can’t pay in full. Others offer partial or full refunds. Read the fine print. Shoppers typically have four to 16 weeks to pay, depending on the size of the purchase and the retailer. In most cases, customers pay via PayPal, and the retailers ship the items after they’ve been paid in full.
This e-retailer offers a variety of products but mostly electronics, such as laptops, audio equipment, TVs and MP3 players, as well as toys. Everything, of course, is available to buy as a layaway item.
After shoppers find something they want, they click on “shopping cart.” They must make six monthly payments, which vary depending on the cost of the item. Unlike most online layaway plans, shoppers can pay online – by online check only -- or they can mail in a check or money order to a P.O. Box in Chicago.
If a product is discontinued, Lay-Away.com’s “support team” chooses a comparable item and asks customers for their approval. Lay-Away.com charges a $35 cancellation fee.
This is a web-based clearinghouse for more than 1,000 companies that offer layaway plans for shoppers. It bills itself as an “online payment system” that charges a transaction fee of as low as 1.9 percent and holds payments “in trust” and transfers them to the merchants after the full payment has been made.
To use this site, shoppers must register. (Don’t worry: It’s free.) They’ll also need a bank account because money is taken out of shoppers’ bank accounts on a payment schedule that shoppers approve. If there isn’t enough money in their bank accounts, the overdraft fee is only $5, and the cancellation fee is $25 or 10 percent of the purchase price, whichever is less.
eLayaway.com characterizes online layaway programs as “somewhat rare,” which is only somewhat true. But the nice thing about it is they offer a wide variety of things, and customers don’t have to go somewhere to pick up what they bought. The layaway balance includes shipping and taxes, if any.
Online layaway plans aren’t very different than traditional layaway plans. Customers who shop online see what they’d like to buy, make a down-payment, sometimes pay a small fee and agree to a payment schedule that requires them to make regular payments online. They have to wait for what they bought, of course, but they avoid going into debt.