What Is Layaway? Overview, 9 Facts You Need To Know

The term “layaway” refers to a particular form of retail purchasing plan in which consumers put a down payment on an item and then “lay it away” until they have the funds to pay for it in full.

Customers with lesser incomes who fear making a single major purchase payment may benefit the most from layaway options. Continue reading if you want to learn everything there is to know about layaway.

What Is Layaway?

With layaway, a consumer makes an initial purchase, and the store holds the item until the remainder of the payment is made, after which the buyer receives the item.

When a buyer chooses a layaway arrangement, they may be assured that they will receive their desired goods upon complete payment.

What Is Layaway?

Understanding Layaway

Customers with lesser incomes who are unable to make large purchases all at once may profit from layaway. Since the merchant must normally store the goods until all payments are received, this service is not always free.

Layaways are a simple method of payment for clients with low credit, and the merchant assumes little risk by offering them. The item is returned to the shelf if the sale falls through. A consumer’s payment may be returned in whole, lost in its entirety, or restored minus a service fee.

Additionally, stores might gain from layaway services since it allows customers with lower incomes to save for items. Once a customer places an item on layaway, it is less likely that they will change their mind and use the money for anything else.

Online Layaway

Customers can utilize their bank account details to pay for online layaway purchases. Online layaway simplifies the layaway process for both the business and the client by removing the need for expensive and time-consuming storage and paperwork.

During the layaway time, instead of occupying costly retail warehouse space, layaways are stored at the distribution center.

Customers can use layaway as an alternative budgeting tool, a way to avoid going into debt, and a way to reserve a product that is difficult to purchase or not always available due to its high demand and popularity, similar to what they did in the past when shopping at brick-and-mortar establishments.

What Is Layaway?

There are many items and services available for layaway on the internet, including netbooks, home gyms, concert tickets, and layaway vacations.

During the Christmas season, many businesses provide layaway, and some individuals have adopted the practice of contributing to others’ layaways in order to receive their gifts early.

Guaranteed consumer funding (GCF) is a method of financing that, similar to layaway, allows customers to purchase items on installment plans regardless of their credit scores.

Layaways vs. Credit Cards

There are certain similarities between layaways and credit cards, but there are also key variances. When someone wants to purchase an expensive item but has the necessary funds, layaway or a credit card might be used.

Failure to make payments on time or at all carries with it similar repercussions. Both also allows payments to be made over time.

When paying with a credit card, the client can leave with the item immediately, however when using layaway, the consumer cannot leave until the item has been paid in full.

Credit cards do not require a deposit, whereas layaway does. Some layaway arrangements do not charge interest on the outstanding balance. When you use a credit card to make a purchase, interest is automatically applied to your purchase, which can quickly increase the overall cost and put you in debt.

In contrast to credit cards, your credit score will not suffer if you miss a layaway payment. While excellent credit is not essential to use a layaway program, obtaining a credit card or favorable terms when applying for one is required.

If you can afford to pay your credit card amount in full each month, then having a credit card is a viable option. You may purchase anything with a credit card, receive it promptly, and join in a rewards program that awards you with points or cash back.

If you cannot pay your credit card account in full by the end of the month, layaway may be a better option.

How Layaway Transactions Work

Stores have varying layaway procedures. Standard operating procedure involves the following steps:

What Is Layaway?

  1. A consumer who want to place one or more things on layaway should only choose the desired items and bring them to the layaway or customer service desk. Electronics and cosmetics are common examples of product categories that qualify for layaway arrangements.
  2. Before authorizing an item for purchase, retailers generally need a deposit. Depending on the store, a down payment may be a fixed percentage of the total price, or it may be left to the consumer’s choice.
  3. The next step is to choose the layaway plan’s terms. Depending on the price of the item and the customer’s disposable income, the retailer may offer weekly, biweekly, or monthly payment plans. The remaining amount of the purchase price must be paid in accordance with the layaway terms.
  4. Once all payments are completed in full and there is no outstanding balance, the customer may get the item(s) from the store. Some businesses charge a modest, predetermined fee for storing items during the layaway period.

The Origin of Layaway Plans

During the Great Depression of the 1930s, when most people’s finances were severely pressured, layaway became widely available for the first time. When credit cards were more widely available in the 1980s, their utility began to decline.

In September 2006, Walmart ended its layaway service after 44 years, according to NPR. The company reported suffering from declining demand and higher pricing.

Wal-Mart resumed the service in September 2011 as a result of the Great Recession’s new financial problems and the associated increase in customer credit limitations. It was resurrected just during the winter vacations.

After 2021, Walmart once again discontinued its layaway service in favor of a buy now, pay later (BNPL) option under the Affirm brand.

The Affirm program functions similarly to a loan, with the exception that the client does not have to wait to get the goods. They repay the loan in payments over a defined time frame, which is typically three to twenty-four months but can be longer for bigger loans.

Among the items eligible for this sort of financing include electronics, video games, tools, toys, musical instruments, jewelry, home improvement, and apparel.

What Is Layaway?

There are a few 0% APR specials, but the typical APR for this offer is between 10% and 30%. Although creating an Affirm account has no impact on your credit, using the service to make a transaction may.

Due to these changes, the program acts more like a credit card and distinguishes itself from other BNPL choices. As opposed to credit cards, Affirm does not charge any fees.

Does Anyone Still Use Layaway?

There are still some companies in 2021 that provide layaway programs, however the details of each plan vary. Here are seven illustrations:

Army & Air Force Exchange

This military equipment shop offers three layaway options.

  • All clothes, footwear, and accessories are eligible for a 30-day layaway.
  • Items can be placed on layaway for sixty days (except jewelry)
  • Outstandingly beautiful jewelry is offered on a 120-day layaway.

For sales above $25, a non-refundable processing fee of $3 and a 15% down payment are needed. If the order is canceled, a $5 cancellation charge will be assessed.

Excluded are sale products, computers and other major appliances, furniture, mattresses, gym equipment, seasonal and outdoor living items, and gadgets priced at $299 or more. This service is only available in-store, sorry.

Baby Depot and Burlington Coat Factory

As they are both owned by the same firm, their layaway policies are identical. As it may not be accessible everywhere, however, you should check the Burlington website for a list of locations that offer it.

You have thirty days to settle your layaway. A down payment of $10 (or 20% of the total) and a $5 (non-refundable) service fee are required.

Payment must be made in person using cash, check, or credit card, in whole or in installments, and must be made in person. A 10 dollar fee will be applied in the case of a cancellation. Items like food, wall décor, rugs, lights, and furniture cannot be returned.

Big Lots

At Big Lots, there are two layaway options available. The first option is known as “Price Hold.” In the event that an item is temporarily unavailable or you are unable to pay in full, the original price will be honored.

A hold has been put on the price until the item is back in stock or until full payment has been received.

What Is Layaway?

There is no hard-and-fast rule, but the company wants to know when you’re within two weeks of paying it off so they can prepare it for pickup. 9 You may only participate if you shop at Big Lots furniture stores, a list of which is available on the website’s Store Locator page.

Progressive Leasing provides a 12-month lease option (or 3-months in California). Even while you will be able to take your goods home with you, keep in mind that you are only leasing them until full payment is made.

Minimum qualifying criteria include 18 years of age, a bank account, a credit or debit card, and a valid Social Security number or individual taxpayer identification number (ITIN). Application and processing are provided at no cost. Your credit card or debit card will be automatically charged.

You can obtain the product before the general public, but it will cost you additional money to do so (except in California). Sofas, loveseats, sections, dining sets, beds, as well as seasonal outside patio furniture such as gazebos, umbrellas, and chairs are all fair game.


Several Hallmark Gold Crown shops offer layaway arrangements from July through December. To place an item on layaway for up to 90 days, please inquire in-store (but not online) with a sales associate.

Twenty percent of the purchase price is the minimum down payment, and the agreement terms will be supplied in writing (which vary by store). If you are a member of Hallmark Crown Rewards, you may earn points on layaway purchases of in-stock goods.

Kmart and Sears

Both Kmart and Sears are owned by the same corporation, Transformco, and both provide online and in-store layaway alternatives.

Customers may place items costing $300 or more on layaway for 12 weeks at selected Kmart and Sears shops.

Every two weeks, you may make your $10 down payment in-store or online. Items with a turnaround time of eight weeks carry a $5 service fee, while those with a turnaround time of twelve weeks incur a $10 service fee.

If you fail to make a payment within seven days of the due date, depending on the duration of your layaway, you will be charged a $10 or $20 cancellation fee. Up until the moment of cancellation, all payments will be reimbursed in full, less any applicable service and cancellation fees.

There is a label on the product page that indicates “Layaway Eligible” if the item qualifies for installment payments.

According to Best Life, a website dedicated to health and wellbeing, Kmart will close all but six stores by the end of 2021. According to the Chicago Tribune, as of September 16, 2021, just 35 Sears locations remained open.

What Is Layaway?

Former parent company Sears Holdings filed into bankruptcy in 2018, and since then, Transformco has been liquidating assets and closing stores.


Vivaloan is the lender that supports the eLayaway service offered by Marshalls. In as little as seven minutes, you might be on your way to receiving the necessary finances. The first deposit is 10% plus a $5 service fee, both of which are non-refundable. Within thirty days, you will be able to make installment payments.

To qualify, you must be at least 18 years old, have a regular income, and have missed no more than a few payments on your credit record. Credit bureaus will view you favorably if you make your loan payments punctually.


Buckle is a well-known high-end and mid-range retailer of fashionable young men’s and women’s casual clothing, shoes, and accessories.

Using the layaway option provided by Buckle, customers may reserve products in-store with a minimum 20% deposit. As long as the layaway cost is paid in full within 60 days, the guest’s local Buckle store will store the item(s). There is no service charge levied.

Pros and Cons of layaway


Zero Interest

No interest is charged to layaway customers on their purchases. Compared to the 15-25% interest that credit cards frequently charge (and in some circumstances, even higher), layaway is the more economical choice.

By charging companies a small, one-time fee, layaway providers are able to offset the cost of storage.

A July 2018 Splitit survey found that one-third of American consumers would be more willing to purchase online if they could pay for digital things in installments without paying interest.

Moreover, according to the same survey, over half of respondents believe that interest-free payments are the most important factor to consider when choosing a payment plan.

Easy Acceptance Criteria

In comparison to other kinds of financing, layaway plans have less eligibility restrictions. Unlike credit card firms, retailers do not perform credit checks on their clients.

What Is Layaway?

These programs are available to consumers with poor or no credit ratings, as they simply demand an initial deposit and confirmation of identity.

Available Online

Some online retailers provide layaway as a payment plan option. Thus, you will not waste time standing in line or driving all around town. A consumer can place an item on layaway with an online store and have the payments automatically taken from their bank account until the item is paid in full.

By removing the need for physical inventory storage and accompanying bookkeeping costs, online layaway streamlines the layaway process for both businesses and customers. Rather of occupying valuable shop storage space, layaway merchandise are held at the distribution center.



In most instances, layaway interest is waived. In addition to the original payment, many retailers insist on collecting service fees, cancellation fees, and restocking fees. The prices range from $5 to $100.

Therefore, a little item is not suitable for a layaway plan. In addition, if the layaway agreement is discontinued, these expenses may be lost.

Strict Payment Terms

To utilize layaway services, clients must make consistent payments within the allotted time frame. If a client violates these rules, their possessions will be trashed and they will be charged a cancellation fee.

Potential Losses

The money you put toward a layaway will not be lost if you do not complete the transaction, but you will incur additional fees.

The majority of businesses charge a cancellation fee for layaway agreements that are not paid in full or canceled. If the goods must be returned to the store’s shelves, a restocking fee may also be charged.

Not Available For Every Purchase

At times, the range of items offered for layaway is limited at many businesses. In addition, owing to the additional costs, layaway is not suggested or used for items of little value.

Additional layaway-related information

What is a Layaway Plan?

For people with low funds, layaway is an alternate method of payment. After placing an initial deposit, the client may make weekly or monthly installments until the balance is paid in full. Once the layaway amount is paid in full, buyers may be confident that they will get the selected item.

Is Layaway A Loan?

A layaway is not a loan. The remaining payments are not subject to interest charges. In addition, we do not dispatch your item until full payment has been received. You may eventually be unable to pay the outstanding sum in full. There may be a service fee associated.

Does Layaway Build Credit?

Since you won’t receive the item until you pay for it in full, putting it on hold is not an effective credit-building method. The store does not provide loans.

Therefore, the business will not evaluate your credit history or demand you to fill out a credit application before accepting your layaway plan. A layaway agreement offers this advantage since it does not trigger a fresh credit check.

What Is Layaway?

Is a Layaway Plan Better Than Using a Credit Card?

It is contingent. Credit cards reduce the requirement for a down payment and allow for immediate acquisition and ownership.

As opposed to layaway plans, careful credit card use can actually increase credit ratings. Moreover, unlike layaway programs, credit cards generally have a rewards program.

However, interest is often not charged on layaway plans, but it may accumulate rapidly on credit cards. And a credit card default will negatively impact your credit score, but a layaway arrangement will not. For a credit card, you need excellent credit, but not for a layaway plan.

If you are able to pay off your bill in full every month, credit card purchases are preferable to layaway programs. If you cannot pay with cash, a layaway arrangement may be your best alternative.

What Happens If You Stop Paying Layaway?

If you or the business cancels a layaway, you will get a full refund of all payments made. The merchant may assess a cancellation or restocking charge. Likewise, the service fee is non-refundable.


Customers who could not pay the entire purchase price at the time would frequently employ layaway. If you’ve ever wondered, “What is layaway?” this article may provide some clarification. Can you list the benefits and drawbacks? When and how did it initially appear? Therefore, it is your decision whether or not to apply for this payment plan.

Although there are several handy alternatives to layaway, many big stores continue to employ it. It demonstrates that layaway has advantages over alternative payment options that make it a feasible option for many consumers.

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