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Layaway is a purchasing method where a consumer reserves an item by making an initial deposit and then making periodic payments until the full price is paid off. Retailers hold the item during the payment process, which can range from several weeks to a few months. Once the purchaser has paid the full price, they can take possession of the item.


The phonetics of the keyword “Layaway” in the International Phonetic Alphabet (IPA): /ˈleɪəˌweɪ/

Key Takeaways

  1. Layaway is a purchasing method that allows customers to reserve an item and make installment payments over a certain period, usually without incurring interest.
  2. Once the full payment is completed, the customer can take ownership of the reserved item. This can be a useful budgeting tool for consumers looking to acquire expensive items without incurring debt.
  3. However, layaway programs may involve administrative or service fees, and in some cases, customers may lose the money they have paid into the layaway plan if they fail to complete the entire payment on time or choose to cancel the layaway agreement.


Layaway is an important business and finance term because it refers to a purchasing method that allows customers to reserve items they desire to buy by making smaller, regular payments over a specified period instead of paying the full amount upfront. Layaway plans provide financial flexibility for consumers who may not be able to afford an immediate purchase or do not want to use a credit card. Furthermore, they enable businesses to attract more customers and generate sales, facilitating revenue growth and potentially improving customer retention by offering shoppers a convenient purchasing alternative. By understanding layaway, both businesses and consumers can benefit from this unique and valuable payment plan.


Layaway is a purchasing method that primarily serves the purpose of allowing consumers to reserve and pay for their desired products incrementally, over a specified time period, rather than making an outright purchase. This method is particularly useful for those who may have budget constraints or are looking to make a large purchase but do not have immediate access to the necessary funds. Layaway plans, which are often offered by various retail establishments, enable customers to secure their desired items by making a small down payment, followed by a series of interest-free installments paid over several weeks or months. Once all the scheduled payments have been made, the customer can then collect their purchased item.

The layaway system has distinct advantages for both consumers and retailers. For consumers, it allows them to make planned purchases that can be more manageable within their budget, by spreading the cost over a period of time. It also provides a sense of commitment and motivation to save towards achieving the goal of owning the desired item. Retailers, on the other hand, benefit from increased customer loyalty, as consumers who choose the layaway option are less likely to cancel their purchase or switch to a competitor. Furthermore, it can help retailers to move inventory more consistently, thereby boosting sales and reducing the possibility of having to dramatically discount items at the end of the season. Overall, the layaway system is a valuable tool catering to the financial needs and preferences of both buyers and sellers in the market.


1. Walmart Layaway Program: Walmart, a well-known retail corporation, offers a layaway service during the holiday season. Customers can reserve an item, make a down payment, and pay the balance in installments over a set period. Once the item is fully paid, the customer can take it home. This service is particularly helpful for those planning to buy high-priced products like electronics, toys, and jewelry but need time to manage their finances.

2. Kmart Layaway Program: Kmart, a retail chain, has a layaway program that allows customers to pay for items over an 8 or 12-week period. Customers can choose eligible products, make a down payment, and pay a service fee to enroll in the program. They then make payments every two weeks, either in-store or online. After the final payment is made, the customer can pick up their items at the store.

3. Burlington Coat Factory Layaway Program: Burlington, a retail store offering clothing, accessories, and home goods, provides a layaway service for customers. Shoppers can reserve items with a 20% down payment, a service fee, and pay off their balance within a 60-day period. Payments are made every 14 days, and customers can pick up their items from the store once the balance is paid off. This option is helpful for those wishing to buy pricier items like winter coats or home furnishings without an immediate financial burden.

Frequently Asked Questions(FAQ)

What is layaway?

Layaway is a purchasing method in which a customer reserves an item by making a small deposit and then pays the balance over a specified period through installment payments. Once the full payment is made, the customer can take ownership of the item.

How does layaway work?

In a layaway plan, the customer selects the item they want to purchase and makes an initial deposit, usually a percentage of the total cost. The store will then set aside the item while the customer makes regular payments until the full price is paid. After the final payment is made, the customer can collect the item.

Where is layaway commonly used?

Layaway plans are frequently offered by retail stores (especially during holiday seasons) for purchasing various products like electronics, furniture, jewelry, and toys. It may also be occasionally used in other industries, such as travel, to book trips and vacations.

Why choose layaway over other payment methods?

Layaway can be beneficial for customers who cannot afford to pay the full price of an item upfront or do not have access to credit. It also helps customers budget their purchases more effectively and prevents accumulating debt or high-interest rates associated with credit cards.

Are there any fees associated with layaway?

Some stores may charge a service fee for setting up a layaway plan, as well as a cancellation fee if the customer chooses not to complete the payment plan. However, these fees can vary depending on the retailer, so it is essential to review the layaway terms and conditions before starting a plan.

Can I cancel a layaway plan?

Yes, customers can generally cancel their layaway plan. However, this may result in a cancellation fee or loss of the initial deposit, depending on the store policies.

Is layaway available for online purchases?

Some retailers offer layaway plans for online purchases, though this might not be as common as in-store layaway programs. Customers should check if a retailer’s website has a layaway option before creating an online purchase.

How long does a layaway plan typically last?

Layaway plans can vary in duration, but generally, they last between 30 to 90 days. The length of the plan depends on the retailer’s terms and conditions and the type of item being purchased.

Can I change the item on layaway?

Depending on the store’s policy, customers might be able to switch the item on layaway for another one. However, it is essential to consult with the retailer to determine if changing the item is possible and if any additional fees apply.

Are the prices for items on layaway guaranteed?

Typically, the price of the item is locked in when the customer starts the layaway plan. It means that if the price of the item changes during the layaway period, the customer still pays the original price agreed upon at the beginning of the plan. However, the store’s specific conditions should be checked for clarification.

Related Finance Terms

  • Down payment
  • Installment payments
  • Reserve in store
  • Payment plan
  • Purchase agreement

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