Paying Over Time - Is It Losing You Money?
Holiday seasons slump the sales of many retailers as the purchasing power of people decreases. As people buy fewer expensive gifts, sales do not meet the expectation. In response to this, retails have gone all out, including the revival of their layaway plans.
Layaway plans are promoted to boost sales and make the purchase easier for customers. It involves paying over time through small payment plans. Though it might seem attractive, there are a few cons to this. In general, the idea is great as people can slowly pay back their due amount. However, it can become frustrating in the long run, and you might be losing your money.
Here are 4 reasons why paying over time costs you more than the product's actual price.
Layaway plans are interest-free and only pay back the product's price. Still, it involves some complications. Like paying a $10 fee might seem like nothing for a $600product, but for a $25 toaster, it can be too much. Unless you are purchasing a hot ticket item, fees can be daunting for many customers.
Retail giants are more customer-centered and tend to remove friction in purchase decisions. For example, there is no layaway fee for Walmart. However, there is a purchase range for which you can opt for small payment options. At Walmart, the price starts at $50. So, if your purchase is below this number, you won't be allowed to pay over time.
People enter into layaway plans without understanding the store's policies, and this becomes troublesome in the future. For example, some stores have a policy of receiving payment in-store every two weeks. This means driving to the store to make small payments. Other stores might have scheduled payment options, but you have to pay the final amount by a set date or risk losing the product.
Change Of Mind
One of the biggest problems with paying over time is keeping the product until your payment plan comes to an end. You may pay off half of your purchase and then realize you don't need the product. Some stores have an option of return, but it requires full payment to be settled. This can become challenging because if you were in the state of making a hefty payment, you wouldn't have chosen a layaway plan in the first place.
Not For every Product
Retailers are very smart when it comes to making profits. If you think layaway plans are for all products, then think again. You will mostly find small payment options for products that are not trending. This is so that the store can anyhow sell the product and free their inventory.