We are independent & ad-supported. We may earn a commission for purchases made through our links.

Advertiser Disclosure

Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.

How We Make Money

We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently from our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is Layaway?

Mary McMahon
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Layaway is a type of agreement that can be made between a retailer and a consumer. The consumer pays a deposit to reserve an item, which is held until the consumer pays in full. The item itself is said to be “on layaway.” Typically, the customer has a set period of time in which he or she must pay in full for the item. If the customer fails to pay, the item is returned to stock for a small fee and the consumer's money is refunded.

It used to be quite common to purchase things on layaway, primarily because consumers were not readily offered lines of credit. When someone wanted to purchase a big ticket item, therefore, they would have had to complete the purchase in a layaway style if they could not afford the cost up front. The rise of credit cards and store credit has made this type of agreement somewhat more uncommon, but some companies do still offer it.

There are several advantages to purchasing something on layaway when the full price is not feasible up front. The first is that the item is held for the customer, so he or she knows that it will be available later. By buying items this way, consumers make a promise to buy the product, while the retailer agrees not to sell it to someone else in the meantime. The second is that a layaway plan typically has minimal or no fees, often making it less expensive than carrying a balance on a credit card.

In some regions of the world, layaway is called lay-by, or lay-away. The basic concept remains the same, however. Typically, the deposit represents a percentage of the total price, and a schedule of payments is usually worked out. If the consumer thinks that he or she will have difficulty making the payments, a new payment plan may be negotiable.

Not all stores offer layaway. It does require additional storage space, and this is not always possible in a small business. In addition, it also requires certain administrative duties, since someone needs to keep track of the payments and objects on layaway in the store. The rise in availability of lines of credit has also led stores to encourage the use of credit cards by their customers. Some stores also offer lines of credit through store credit cards, and they may provide rewards for customers who apply for and use store credit.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments

By anon349972 — On Oct 01, 2013

Plain and simple: if you can't afford it, you don't need it.

By anon161567 — On Mar 20, 2011

Layaway seems like a stupid concept for stupid people. People who use layaway can't save money for themselves. They need a structured payment system to help them manage their own money so they can buy things.

I'll bet the same people who use layaway also use regular mail to pay bills and actually go into the electric company, water company and cellphone stores to stand in line and pay their bills too.

By comfyshoes — On Nov 23, 2010

I remember when I was 18 and in college, I used layaway programs in order to buy my Christmas gifts because I was just starting to establish my credit.

I always looked at what stores offered layaway and did my shopping based on that. Layaway used to be very popular and I think that with the poor economy it might experience resurgence in many stores.

For now, Kmart and Sears are the mainstays in layaway plans. It does give these stores a competitive advantage among other retailers.

By Sunny27 — On Nov 23, 2010

Cupcake15-I know that it is a hassle for a store to have a layaway program because they not only have to have someone dedicated to making sure the customers follow the layaway policy, but they also have to store the excess merchandise that a customer may or may not pay for in full.

Some of this merchandise that is pulled off the floor might have been sold if it remained on the sales floor. These are among the many reasons why stores choose to opt out of such a program.

However, with the troubled economy some stores might begin a modified version of a layaway program in order to attract customers. K mart layaway is very effective which proves that stores with layaway are positively received by consumers.

By cupcake15 — On Nov 23, 2010

Cafe41-The Kmart layaway plan advertises their layaway program during the holidays because Target has no layaway and neither does Wal Mart.

Stores with layaway plans are Sears, Babies R’ Us, and Burlington Coat Factory. Burlington Coat Factory charges a $5 service fee and requires a 20% deposit.

Marshalls and TJ Maxx offer layaway in select stores. These are the most well know stores who offer layaway.

Online layaway is another option and is available through a company called ELayaway. This is a Florida based company that handles layaway programs for up to 700 online retailers including Best Buy.

They charge a 1.9% transaction fee which is collected on the first month. Most participants take from six to eight months to pay off the balance. The cancelation fee is $25 or 10% of the order which ever is greater.

By cafe41 — On Nov 23, 2010

Layaways are a great way to buy a series of things by saving up to buy them rather than using your credit card.

A layaway program is especially helpful during the Christmas holidays when gift giving is at an all time high.

By placing your merchandise on layaway you will be forced to budget which is something credit cards do no allow you to do because they are so easy to use.

In fact, most consumers spend more when they use a credit card which is why most retailers offer incentives for their customers to sign up for their credit card.

Even if you have established credit, participating in a layaway is still a good idea because even if you pay your bills at the end of the month and do not carry a credit card balance at lot of banks are now charging their best customers monthly fees of $1.5 or more, even if the balance is not carried over to the next month.

This makes the minimal layaway fee cost effective.

Mary McMahon

Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.