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Friday, October 5, 2012

Financing vs. Layaway

When it comes to getting the things that you want and need in life, there are many options for purchase. For those of you considering financing and layaway, here are a few of the pros and cons for both:


Product financing options
Consumer financing helps retailers boost sales
Financing something that you want or need is a great way to get that object right then and there. When you finance a product you are able to leave the store with it that day which is very enticing to many people. Financing options very from store to store, but the general idea is that you are offered a line of credit to pay for the object and that you make monthly payments for a predetermined amount of time until the object is paid in full.

One of the downsides to financing something is that it does require a credit check and a hit on your credit. If you are over extended and finance too many things it can negatively affect your credit. Another problem with financing, is that there is usually an interest rate involved meaning you will pay much more for the item over time than you would have if you paid cash. Before you finance something you should make sure you can afford the monthly payment and don’t mind the hit on your credit.


Layaway purchases
Layway provides an alternative to credit
Layaway may not be as popular as it used to be, but it is still a really fantastic way to get the things you want without having to pay for them up front. With layaway there is no credit check required and no line of credit opened up. Generally you will have to put a bit of money down to secure the item that you want to purchase, and then you will have to make monthly payments to ensure that the item is held for you.

A lot of layaway programs don’t require a minimum monthly payment, they just require that you make some sort of payment. When the entire balance is paid off you are then free to take the product home with you, as you will own it out right. The downside to layaway is that you don’t get to take the product home with you right away and you have to wait until it is paid in full.

Both methods of payment have their pros and cons. If you absolutely need something right away then financing is the way to go. On the other hand, if you can afford to wait, you may be better off going with layaway as you won’t spend any extra money on interest and you can still get the product that you want. When it comes to finances there is no reason to rush your decisions. Take time to figure out what is best for you and then stick with your decision.

About the author: Arizona bankruptcy attorney, Benjamin Skinner, helps those who have found themselves struggling to overcome debt due to life emergencies or financing issues.

Image license: 1. Geralt/Pixabay, US-PD;  2. Random Retail, CC BY 2.0


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