Know Your Way Around Online Layaway?

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About This Quiz

Layaway plans have always been popular in times of financial difficulty. But you don't need to be strapped for cash in order to benefit from an installment plan. Here, test your knowledge of the Web-based resurrection of a once-ubiquitous payment option.

Online layaway differs from standard online purchasing in that:

In contrast to standard purchasing, where you pay the entire purchase price and receive your item immediately, layaway programs offer long-term payment plans: You put down a down payment, pay a service fee, and then make regular payments until the purchase price is reached. Once you've paid the entire cost, you receive your item.

Online layaway is offered by:

Like shopping, layaway was once an exclusively brick-and-mortar offering. Now, in the online-shopping age, all kinds of stores with an online presence, whether it's exclusively online or not, are offering layaway. Many stores have both online and in-store layaway options.

Many people use layaway as:

Because a layaway purchase requires long-term planning, lots of people find it to be an excellent money-management strategy. It tends to help with budgeting, cut down on impulse buying and reduce the interest and debt associated with buying on credit.

A typical down payment in an online layaway plan might be:

While down-payment percentages vary, not only by Web site but also by price point, most layaway plans require a down payment somewhere between 10 percent and 25 percent. A higher down payment corresponds with lower installments, and a lower down payment with higher installments.

Layaway plans often offer flexibility in which of the following features:

Most layaway plans do not charge interest -- that's one of the big draws of layaway over credit card. The primary factors involved in layaway are how much you pay biweekly or monthly, and how long it takes you to complete payment. Most layaway plans allow for some adjustment in both.

To use a layaway program, you usually have to pay:

When you buy something on a layaway plan, you pay a service fee that does not go toward the purchase price of the item. It's typically quite small -- no more than $25, and usually much less. It's always best to read the fine print in the agreement, though, to make sure the service fee is acceptable to you.

You can only use online layaway if:

Almost anyone who can visit a Web site can buy something on layaway. Some layaway sites accept only bank accounts or debit cards; other accept credit cards, as well; and some of the biggest sites accept not only debit and credit but also allow you to make cash and money-order payments in-person or by mail.

Which of the following types of products are available for layaway?

Since the economic downturn of 2008, layaway has come back in a big way. In addition to the obvious retail purchases like furniture and bedding and clothes, luxury items such as cruise vacations, concert and sporting-event tickets, and even cosmetic surgery are being sold with a layaway option. (In fact, you might find many types of surgeries, even non-cosmetic, available on layaway.)

What happens after you make your final payment?

Once you complete your layaway payments, the item is yours, just like you bought it with cash or on credit. Depending on whom you've made the purchase from and what you've bought, you can either pick up your item or schedule delivery. (Some smaller companies require a short period of time, typically only a few days, to complete the transaction.)

If you cancel a layaway contract before the final payment, you may need to:

Almost all layaway programs carry a cancellation fee. If you end the contract before you've completed your payments, you'll typically have to pay anywhere from $5 to $20. As with the service fee, always find out how much the cancellation fee is before signing the contract.

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