Can someone explain why layaway is preferable to just saving the money and paying it all at once?

Question

I've never understood why people make payments on something that they don't yet own when they could essentially do the same thing in a savings account and then just buy the item when they've saved enough.

Answer 1

Lay-a-way garuantees the product will be there when you can afford to pay for it. Once you put an item on lay-a-way, the price can't go up while you wait for it.
Sometimes people just never have enough money all at once.
Law-a way isn't like a loan. Most of the time there is no fee. Its an incentive to shop at that store.

Answer 2

Layaway was popular until just a few years ago because credit cards weren't so prevalent. For people who weren't disciplined enough to save money on their own, putting an item on layaway gave them incentive to pay a little at a time, until they paid off the entire amount and they could take it home. Nowadays, these same people can take home their purchase immediately and pay it off later (or not...) I don't think layaway is used much by merchants any longer.

Answer 3

well tink of it like this theres a big toy out that the kid wants for his birthday and its flying off the shelf your better off holding it in layaway and that saves it for you and you cant lose it unless u dont pay payments or something if you save the money then you wont find it and your screwed clothes also if you find like a nice shirt and you dont have the money now put it in layaway to ensure that your gonna wear it and nobody else hope it helps i never did layaway before

Answer 4

Some are poor at managing their money. If they see a light (object in layaway) at the end of the tunnel, then they are more apt to respond. Also, it's a good way to get a sale price on a large item even if you don't have all the money (or credit) this moment.

Answer 5

Its not better and its a bad habit to get into. People under estimate the power of compounding (free money aquired off your savings) and also under estimate the penalty of paying interest (the opposite of compounding your own money). This is why the avg american has over $10,000 in credit card (and other debt) - or a negative savings amount.

Answer 6

layaway is how you get t those who have no credit and/or no cash upfront....it's just how merchants get money out of them too. the lowest risk sales contract, you pay as you go but since you want it, ...well, it's like a carrot dangled in front of a donkey, as the old adage goes, once i pay you enough money, maybe you'll finally hand over the goods.

Answer 7

Becasue 1. the product may be in limited supply
2. you know it's saved for you but you don't have the money to pay it in full
3. A stronger incentive to set money aside each week until you pay it off.
4. No big bad credit card debt or megainterest.

Answer 8

It's the "instant gratification" thing: we want it NOW. Also, I am not sure many people really understand compound interest, either on the side of making payments nor the way it helps savings. We are mathematically challenged.

Answer 9

because sometimes the item is gone by the time you save up to get it and this assures you it will be there when you go pick it up...also, some people just like going into stores frequently and paying smaller amounts each time for what they want.

Answer 10

because this way they get a reward at the end. At the bank, you have to get the money out, shop for the stuff and hope you have enough. If you Lay it away, you know exactly how much you need and how much time you have to get it.