As long as you have cash or a credit card, you pay for an item outright. A good rule of thumb says that it is always better to pay outright and save some money, but a layaway shopping programme can be a good option when you do not have fees to pay.
A layaway plan is a purchasing method that allows you to make payments over time, and the product remains with the store unless you make the final payment. There was a time when layaway programmes got prominent, but they fell out of approval as the trend of plastic cash came. Of course, credit cards are more convenient, and it goes against the grain in the era where people seek instant gratification.
Layaway is different from shopping with credit cards and instalment billing plans. Layaway offers are generally made on large items like electronics. You will have to make a down payment that may vary from store to store, and then you will pay in instalments like weekly, bi-weekly, or monthly depending on the agreement. As you pay off the total purchase price of the item, you can bring it home. Here are the pros and cons of layaway plans.
Pros:
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Interest-free purchasing
If you choose an instalment billing plan, you will have to pay interest. It means you will end up paying more than the cost of the item. If you use a credit card, you will have to pay the money within the interest-free period.
However, not all credit cards provide an interest-free period for all items you buy. If you take out payday loans in Ireland, you can pay for the thing outright, but you will have to pay interest on it. The overall cost will be much higher than the original price of the stuff you want to buy. Therefore, if you do not have money to pay for a product outright, a layaway plan can be a good option.
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You can buy large items easily
Layaway programmes are generally offered during the carnival season. During holidays the demand for great products like electronics goes up. Not all credit cards have limits to buy such big items, and if you take out instant loans in Ireland, you will not likely get disbursed enough money.
If you opt for a layaway offer, you will secure a product you would like to buy without interest. If you keep making instalments on time, it will guarantee that you obtain it.
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Convenient approval criteria
To apply for a layaway programmes, you do not need to go through a credit check and submit your income statement. All these formalities are done when you apply for a loan. To take advantage of a layaway programme, you need to have proof of identification to show that you have come of age and down payment.
Cons:
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Fees
One of the significant drawbacks of a layaway programme is you will have to pay fees. It is not worth bothering as long as you have to pay €10 on an item that costs €250 but paying €10 to purchase an item that requires €50 means adding up the total cost by 20%. Service fees may vary from €5 to €10, but you will have to pay cancellation fees if you fail to pay in the middle.
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Down payments
Though you do not have to pay anything apart from the product’s purchase price, you will have to make some down payment to secure the item. The size of the down payment varies from store to store. The down payment will account for the significant portion of the total cost of the item.
Takeaway
Whether a layaway programme is a good option or a bad option depends on your affordability. Though you do not need to pay interest on top of the purchasing price and it allows you to pay in instalments, it is still subject to risk. As you are buying a large item, the payment period may be prolonged.
It is not surprising that you have paid a couple of instalments on time. Then eventually, you have lost your job, or you have come across a financial emergency that strapped you and feeling difficulty keeping up with payments. If this happens, you will have to pay a cancellation fee, and the money you had already paid will go down the drain. So, before you opt for this offer, think wisely.
