Attention Layaway Shoppers: 8 Tips to Know Before Using Layaway

5.     What happens if something goes wrong?

Unexpected things happen in life, so it’s a good idea to know what would happen with your layaway purchase, or the money you’ve paid up front, if your finances change and you’re not able to meet the original terms of your layaway agreement.

Are you penalized, for example, if you miss a payment? Are there any “late fee penalties”? Do they return the item into stock or into their inventory? What exactly happens if you don’t pay as agreed? That’s important to know.

6.     Can I get a store credit?

Be sure to find out upfront if a retailer is willing to offer a store credit if you change your mind after making a few payments. You might simply change your mind or maybe you find the same item at a much cheaper price so you decide that you don’t want the layaway goods after all. Well, do you just lose your money or will the store actually issue a refund you or at least give you a store credit? A store that won’t issue a credit could be a deal-breaker for savvy layaway shoppers.

7.     What happens if the item goes on sale later?

Ask merchants whether they will discount the purchase price for you if you were buying something that was previously, say, $99 and you were going to pay, $33 a month for it. But then all of a sudden the item goes on sale for $79.

8.     Do they have a good rating from the Better Business Bureau?

It always pays to do a little homework on the companies with whom you’re doing business. In this case, before you enter into a layaway transaction, you might want to find out a retailer’s BBB rating. It tells you something about the way in which the company conducts business, the level of consumer complaints they’ve had, and so on.

Again, I like the idea of using layaway. Some people consider it sort of a throwback, kind of a relic of that old‑fashioned, good old method if saving up enough money for a purchase until you can actually pay for the whole thing in cash.

And you know what? That’s a good habit to get used to — or perhaps to get back to.

Back in the day, a lot of us used layaway as a way to budget and avoid credit card debt. And if you do it this holiday season, you’ll find that it can probably work for you as well — as long as you ask the right questions upfront.

“Ask The Money Coach” is a syndicated column written by personal finance expert Lynnette Khalfani-Cox, co-founder of the free financial advice blog, AskTheMoneyCoach.com. Follow Lynnette on Twitter at @themoneycoach.