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[academic_cog]

I'm watching tv right now and I have seen the recurrence of tons of ads for "layaway" that I haven't seen before --- or at least, not since I was a little kid reading the Sears catalog. I don't quite get the point of it ---- how does it work? You don't get the stuff while you are paying the installments, right? Why don't people just save up a pile of money and pay cash? Or use a credit card? Is there some sort of advantage to paying this way? Or is this yet another way stores scam off poor people?

[systeme_d_]

Layaway is so that
a) non-credit-worthy people (or people who have maxed their credit cards) buy stuff before it is sold out
b) both credit-worthy and non-credit-worthy can purchase something by paying over time, and with no interest accrued.

As a kid, I would never have gotten any presents that cost over ten bucks if it weren't for layaway.

Layaway is not a scam.  It's a frickin' lifesaver for those of us who often can't afford to pay for something outright.

[bioteacher]

From what I understand, it's also a great way to get out of storing the loot until much closer to the event. If you have snoopy kids and or a small house, that can be a real benefit in and of itself!

[merce]

You can see something you want and give yourself the chance to have it.
Start paying on it with what you have and keep putting money on it.
When you take it home you won't owe anyone.
You won't have to worry about something coming and sucking the money in your savings account before you have managed to get it. (Like, your harddrive crashing, your struts going out, an academic association needs your 150 registration or membership fee, a doctor visit is needed, etc.).

Rent-a-stuff stores are a scam.
This is not. You pay before you get the while paying little by little.

[palla]

Layaway is great for Christmas presents.  It allows you to purchase the merchandise over time and not have to find a place to hide it.

[pedanterast]

Layaway is so that
a) non-credit-worthy people (or people who have maxed their credit cards) buy stuff before it is sold out
b) both credit-worthy and non-credit-worthy can purchase something by paying over time, and with no interest accrued.

As a kid, I would never have gotten any presents that cost over ten bucks if it weren't for layaway.

Layaway is not a scam.  It's a frickin' lifesaver for those of us who often can't afford to pay for something outright.

Layaway is a tax on the poor and stupid and of course there is (imputed) interest involved, the interest you could have earned on the layaway payment if you weren't poor and/or stupid.  For more information, see "Fingerhut" and "lottery tickets." 

And if the retailer goes bankrupt in the meantime?  There is a bit of protection under the bankruptcy laws but the lawyers and accountants get paid before the layaway fools.  Good luck with that.

[merce]

...
Layaway is a tax on the poor and stupid ...

Did you just call systeme_d_ stupid?

[_touchedbyanoodle_]

I never understood the point of layaway until I worked a retail job throughout undergrad that included managing the layaway sales. Basically, it's a way to buy something before it sells out and without credit. I've never had trouble with credit, so I've never needed layaway, but for people who can't/won't use credit cards, layaway makes a lot of sense, especially if there is a sale going on while cash isn't handy.

While working retail, I encountered a surprising number of people who refused to use credit, especially older customers. I don't think that's stupid.

[systeme_d_]

Layaway is so that
a) non-credit-worthy people (or people who have maxed their credit cards) buy stuff before it is sold out
b) both credit-worthy and non-credit-worthy can purchase something by paying over time, and with no interest accrued.

As a kid, I would never have gotten any presents that cost over ten bucks if it weren't for layaway.

Layaway is not a scam.  It's a frickin' lifesaver for those of us who often can't afford to pay for something outright.

Layaway is a tax on the poor and stupid and of course there is (imputed) interest involved, the interest you could have earned on the layaway payment if you weren't poor and/or stupid.  For more information, see "Fingerhut" and "lottery tickets." 

And if the retailer goes bankrupt in the meantime?  There is a bit of protection under the bankruptcy laws but the lawyers and accountants get paid before the layaway fools.  Good luck with that.

So, Pedanterast, care to tell me how I should invest my ten dollars a month in such a way that it is worth my time and trouble, and substantial interest accrues?  Yeah, I thought so.

Look, if the nephew wants frickin' Legos, he's getting the nice set.  It might take me three months to pay for it, but it's worth it.  And in all those years of using layaway (I'm over 40), nary a one of the stores has gone bankrupt.  (You really had to reach for that potential downside, didn't you?)

For the record, I've never purchased from Fingerhut, nor do I buy lottery tickets.  Neither makes financial sense. But layaway sure as heck does.

[pedanterast]

Layaway is a tax on those who are

a)  poor
b)  financially stupid by not recognizing the inherent interest component and risk of bankruptcy
c)  desperate and trying to buy something they obviously can't afford, or
d)  more than one of the above

That is the best I can do.  You can substitute "naïve" for stupid if you like.  There was a department store chain, W.H. Grant or something similar, that declared bankruptcy while holding millions of dollars in layaway payments and all those people got left holding the bag.

If you are worried about the kids finding the presents, lock them in the trunk of your car.  That's what my parents did.  This was very instrumental in developing my acting abilities, since I knew where the spare keys were.

Why would a person who refuses to use credit be willing to grant credit?  Layaway payments grant credit to the retailer.

[johnr]

Layaway is a tax on the poor and stupid and of course there is (imputed) interest involved, the interest you could have earned on the layaway payment if you weren't poor and/or stupid.  

Exactly. Layaway a $200 item on Sept. 25 for x-mas, and lets say, just for Pedanterast's sake, that you put down $199 on Sept. 25.  Why, at today's bank interest rates (1%, and that's being generous), you could have earned 33 cents by x-mas!  33 cents!  The world could be yours!  Of course you probably wouldn't lay away $199 on the first day, and your interest rate is probably closer to 0.75%, and lets ignore penalties for early withdraws, and fees because you only have $200 in your account, and good god don't use a debit card to access your money, so the actual amount of interest saved would be much less. So stop dreaming about that 1/6 of a cup of coffee you could have purchased.

[systeme_d_]

A high five and thanks to JohnR.

[pedanterast]

In 1981, thirty day CDs were paying over 20% annually.  So multiply the $199 by thousands of "naïve" (being gentle here) people in a high interest rate environment, and it's quite a wealth transfer from the proletarians to the ruling class.

Research the Grant bankruptcy.

Popcorn?

[academic_cog]

So I don't know about what they used to have for layaway, but the ads I saw were for Wal-Mart and on their web site it says you pay both interest and "fees" if you do layaway this year.

I don't buy toys, but do they really sell out that often? I mean, other than the ones that are a craze and sell out the first day?

[pedanterast]

The trusting, honest, hard-working folks who participate in layaway schemes programs actually think that the product is set aside for them to prevent them from being denied if the product is sold out.  In reality, the retailer can just say the product sold out, and refund the money without interest.  Now, some retailers may have a policy not to do this, but it's not legally required, and retailers tend to get "flexible" with their policies when things aren't going their way.

Or, just keep drinking that Jim Jone Kool Aid.  It goes well with popcorn.