Reading How small businesses can offer customer financing – updating 2022
Layaway is a payment plan in which a company reserves a product for a customer until the customer pays for the item, typically with a series of installment payments. In contrast to other financing options, with a layaway contract, the customer only receives the item after full payment has been made.
If the customer does not complete payment for the item, it is returned to inventory under an interim storage agreement. The customer’s money may be fully refunded, less a fee, or withheld, depending on the terms of the agreement. Some companies charge a fee for holding the item until the customer completes payment.
Layaway lost popularity when credit cards became ubiquitous, but can still be an attractive option for some businesses and consumers. Typically, a layaway agreement allows the customer to avoid interest charges and the price of the item remains fixed. Layaway agreements reduce the risks for the seller and can be offered to customers with poor credit ratings.
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