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In a layaway the retail trader keeps an item aside on behalf of a consumer so that the consumer can pay the price of the item in installments or as a direct payment in full at a later date. Many retailers are reintroducing this method that was in vogue at the time of the great depression, though this time it is struggling retailers with sluggish sales who are initiating the change.

What makes a layaway so attractive?

In a typical layaway the consumer pays a small amount upfront and gets the item booked for a period that normally lasts sixty days (in holidays and the peak season it could be longer). The full price of the item is cleared in small installments and the item is collected after the full payment is made. The process does not use credit cards, no interest is charged to the consumer, and credit ratings are not needed to do a layaway. This way a consumer can be sure that he will receive his favored item a couple of months down the road, and he would have made full use of the season’s discount and lowered prices, even though he did not have the money during the season.

What the consumer needs to be cautious about

A layaway is not entirely a freebie, it could come with a small fee and there may be penalties if the consumer misses an installment. Some layaways permit payments through a credit card but this would mean adding layaway fees to credit card interest thereby making the item more expensive. Then again layaways are restricted to selected items and may not be applicable to many food and electronic items. Also, if the store experiences any financial difficulty and closes down, consumers could stand a risk of losing their paid installments, unless they cough up the balance dues immediately and claim the item.

How credit cards came, saw and conquered

Two changes happened simultaneously. The retailer was finding it impractical (cost wise) to hold large inventories of layaways and wait for part payments to trickle in. On the other hand because of the consumerist culture that was gripping the nation, people wanted their item immediately and were not prepared to wait a minute longer. The stores started issuing branded credit cards (the Diners Club was the first to be introduced in 1950) that were more profitable. With the credit card revolution booming there were fewer takers for layaways.

Why the layaway has important lessons for all of us

  • They emphasize the lesson that for things you can’t afford, it is advisable to wait while you gather means to make the purchase.
  • Layaways are cheaper. The instant gratification that is symptomatic of the credit card era comes with loads or store fees and credit card fees that add up to a big sum making the item more expensive.
  • They teach you the value of budgeting your income and expenses as you need to make periodical payments without fail.
  • They make you more cost conscious and aware of the fine print that adds costs to routine purchases.
  • They worked very well for our seniors and they taught many to make purchases intelligently without accumulating debt.

Consolidate credit card balances and shift to layaways

If you feel that layaways are a more attractive proposition and you would love to free yourself from the burden of credit card debt, use the loan for vehicle title to consolidate your credit card debt.

The cash loan for title assures a sum up to 60% of your car’s commercial value. The car equity loan charges a competitive interest rate of 25% APR which is quite reasonable looking to title loan industry standards. The auto equity loan promises instant money that can be effectively deployed to erase high interest bearing credit card balances. What makes the pawn car title loan practical is that the repayment can be adjusted in such a manner as to suit ones existing source of income.