- Bargaineering - http://www.bargaineering.com/articles -

4 Tips for Effectively Using Layaway

One of the Christmas traditions making a comeback since the recession has been layaway [3]. The idea behind layaway is that you can reserve an expensive item now, and make payments on it for a few weeks. Once you have paid off the item, you can take it home.

Layaway allows you to make sure that  your get the items you want (vital during the holiday shopping season [4]), without breaking the budget — or turning to high-interest credit cards to make the purchase. If you want to make the most of layaway this holiday season, here are 4 tips to consider:

1. Have a Plan for Making the Payments

First and foremost, you need to know that you can make the payments. While some stores have layaway plans that last as long as 12 weeks — or even 16 weeks — many stores limit your layaway options to 8 weeks. You might even have to pay the full amount within 4 to 6 weeks. Make sure you understand the length of time you have to make your payments, and create a budget that allows you to meet the requirements.

Divide up the total of the item by the number of weeks you have. If you need to pick up the item in 6 week, and it costs $200, you will need to pay $33.33 a week. Set that money aside so that you can make those payments as agreed. If you don’t, you could end up seeing your item put back on the shelf.

2. Know the Fees

Realize that some layaway plans come with fees. Stores want to make money, so they do it by charging a fee for layaway. If the item you want is available at more than one store, call around to find out about layaway policies and costs. In many cases, it’s possible to find a store that charges lower fees.

Also, be aware of the restocking fee that might be charged if you change your mind. The refund of the money you have already paid in might be reduced by between 5% and 20% of the purchase price if there is a restocking fee. If you are reserving an item for your child’s Christmas present, make sure that he or she really wants it. Because it will cost you otherwise.

3. Put Something Down

Many layaway programs require you to put something down on on the item before you reserve. In some cases, the amount is a flat fee, like $5 or $10. In other cases, though, you might be required to put down 10% or 20% of the purchase price. Run the numbers and see how much you can put down. The more you pay up front, the sooner you can get the item — and the lower your other payments will be.

4. Keep a List

Make sure to keep a list of the layaway programs you are participating in. That way, you know where each item is, and how much you owe. If you have multiple items with one store, make sure you know which purchases they are. Then, compare your list with what you pick up. Don’t complete the final transaction until you verify that all of the items you put on layaway are present.

(Photo: taberandrew [5])