What Is Layaway? [2024’s Ultimate Guide]


When unsure how you’re going to afford all the presents you want to give to loved ones – don’t stress out: you can use a layaway service and make everyone happy. So, what is layaway, and why is it popular? We’re here to walk you through the explanation and process, so stick around!

What Is Layaway?

Layaway is a purchasing agreement between a retailer and customer in which the seller agrees to reserve an item for a buyer who is not able to pay the full amount at that time.

The customer who wishes to reserve an item needs to pay a deposit which is held until they pay in full. In the meantime, the item is on layaway: the retailer will lay it away for future use, meaning they set it aside. If the customer fails to pay off the layaway within the agreed time frame, the item is put up for sale again.

Layaways come with minimal risk for the retailer, and at the same time assist customers with bad or no credit history. They also help those with limited disposable income who aren’t in a position to purchase higher-priced items at once.

DID YOU KNOW? Stores usually restrict layaway purchases for more expensive items.

How Does Layaway Work?

Layaway works a bit differently than using installment billing plans or shopping with a credit card. Like we already mentioned, layaway enables payments over time, but the item stays in the store until it’s fully paid off.

The rules can differ from one store to another, but most layaways stick to the following process:

  1. As a customer, you can pick the layaway items you want to save and take them to the layaway or customer service department. Most shops only offer layaway for products in certain departments, such as cosmetics, electronics, or jewelry.
  2. If your order gets the green light, the retailer will ask you to make a down payment. The down payment may vary from store to store. Some stores allow customers to decide on the amount themselves, while others charge based on the total purchase price.
  3. Know how layaway works and decide in advance how you want to pay for any layaway transactions. You can choose a weekly, biweekly, or monthly payment plan depending on the store’s policy.
  4. Once you have completed the scheduled deductions and have a zero balance, you’ll be able to pick up the items to take home! Some businesses may require you to pay a minimal layaway fee for storing the items.

At first glance, the layaway purchasing agreement may seem like a straightforward process, but clients can find themselves having to pay extra fees, such as a service fee, cancelation fee, or restocking fee. Make sure to always read your contract carefully!

Advantages and Disadvantages of Layaway

Let’s see the benefits of purchasing an item using layaway programs and why they can be the best option for you.


  • Interest-Free Purchasing

Even though an item on layaway comes with fees, customers aren’t charged interest on purchases. In any case, layaway with fees might cost less than charging purchases to a credit card.

  • Various Buying Options

With layaway, customers can use a credit card to pay for any items they want. In case the consumer doesn’t have a credit card and wants to avoid a store card, they can use the layaway method by paying for purchases over time.

  • Available Online

Another great thing is that some stores provide layaway plans for purchases online, which can save you plenty of time! Online shopping can be a smart choice during the holidays; avoiding all those long lines or running to different stores searching for the items you need is outdated when you have the Internet.

  • Easy Acceptance Criteria

The terms of layaway contracts are simple; they don’t credit or income checks before approval. The only condition to qualify for layaway is proof of identification verifying that you’re at least 18 years (like a driver’s license) and down payment. With these acceptance policies, even customers with bad credit loans can qualify for layaway!


Of course, nothing is ever that simple, though. Let’s check out the downsides of layaway programs.

  • Fees

Layaway prices can be high, especially for smaller purchases. For instance, paying a $10 service fee on a $600 purchase might be acceptable, but paying a $10 service fee for a $50 purchase means an additional 20% on the total cost, which is just too much. That being said, before making an order, make sure to calculate whether it fits into your savings plan.

  • Down Payments

If you decide to put an item on layaway, be aware that most retailers require you to pay a down payment before they agree to hold your purchase. Down payments amounts differ by store, but some of them can charge up to 10%.

  • Strict Payment Terms and Potential Loses

You may face strict layaway payment plan terms, such as making smaller payments in-store weekly or biweekly until you pay off the total amount. Other retailers may allow you to make payments on your schedule, but the final payment has to be on a certain date. If you fail to pay in any way, you’ll lose the item.

If you change your mind and decide that you don’t want the item, you’ll also face a bunch of fees. Most stores charge for canceling a layaway agreement, and some of them even charge an additional restocking fee for putting it back on the shelves.

  • Limited Choice of Items

Usually, there is a limit on the types of purchases you can place on layaway. Categories typically include jewelry, electronics, or other big-ticket items; if you’re looking for an item that is popular at that time, it will be harder to find a retailer who will allow you to place it on layaway.

Key Takeaways

Layaway is a purchasing agreement between a retailer and a customer in which the seller agrees to reserve an item for someone who can’t pay the full amount at one time.
A layaway contract works well for those who have limited funds to spend.
The rules for placing items on layaway can differ from one store to another.
If you don’t pay the full amount on the agreed date, you may lose the item and have to pay a fee.

How Do Layaway Plans Compare to Credit Cards?

Both payment methods have advantages and disadvantages depending on how and where you shop, but credit cards and layaways are only similar on the surface. Before choosing one of them, make sure you understand their crucial distinctions!

Regardless of whether you get a credit card or a layaway plan, you’ll be paying at least a minimum amount. Again, if you aren’t able to meet your contract’s terms, some fees and penalties will be billed.

When using a credit card, a purchase will go through straight away, but you’re paying with borrowed money that is not actually yours. Interest is added to your balance due if you carry it over monthly; you can use the credit card continuously for additional purchases till the account is closed.

On the other hand, there are no interest charges with layaway. You’ll be paying from your bank account, but you have to complete every payment that you’ve agreed to before you can take the item you bought.

To use a layaway program, you don’t need good credit, whereas to receive a credit card (or at least good terms) a good credit score is a must-have. If you find yourself in the bad credit category, don’t worry! You can fix a bad credit score by yourself or with help from credit repair companies.

Is BNPL the Future of Layaway?

Even though buying layaway items has always been popular before and during the holiday season, a new shopping model is stepping up to the stage, offering more perks that customers can enjoy.

Let us introduce BNPL, a short-term financing option. When customers use the BNPL (buy now, pay later) method to purchase in stores or online, they agree to take out a short-term loan. These types of loans are offered by various platforms, such as PayPal, Affirm, Sezzle, Zip, Afterpay, and Klarna.

Compared to a layaway contract, BNPL enables customers to take their purchased items with them right away. Another great thing is that these point-of-sale installment loans can be available to shoppers who do not qualify for credit cards or other types of loans based on their credit history. For instance, Afterpay doesn’t require any credit check to qualify.

BNPL loans generally require customers to make an initial payment when purchasing an item and then pay the rest of the balance in three or more installments. Most BNPL services charge no interest on these types of loans.

Both shoppers and retailers are becoming more fond of the BNPL method, and it’s possible that eventually, it will replace the layaway program. If you’re the type of customer who might like the BNPL method while shopping, check out the top-rated buy now, pay later businesses and enjoy!

DID YOU KNOW? According to a C+R Research Survey, 60% of Americans have used a BNPL service at least once, and nearly half of them are currently making payments through a service.


Even though BNPL has been stepping up, layaway is still popular among customers and businesses. Layaways are a good choice for shoppers who don’t have access to credit or simply don’t want to use anything but their own money. With this knowledge, it’s up to you to decide what is best for your finances; make sure to check the stores’ terms and conditions as well as any possible fees. Happy shopping!


Can you do layaway online?

Yes, you can place an order on layaway online, but only at stores that provide the option in person.

Does BestBuy have a layaway plan?

Now that you know what is layaway, remember that every store has its own rules. At Best Buy, the minimum purchase is $250 and they charge a 5% layaway fee. You must put down 25% of the item’s price and make payments biweekly.

Can you put clothes on layaway at Walmart?

No, Walmart announced that they weren’t offering layaway in 2021. Instead, they are offering payments over time using Affirm.


I learned a lot about finance after working for a digital marketing company specializing in investing and trading stocks, forex, etc. After that, I got exposed to other verticals such as wealth management and personal finance, which further improved my understanding of the financial world.

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