In these tight financial times, a lay-bye can be a cheap and convenient way to budget, but beware of its pitfalls.

What is a lay-bye?

You can choose an item, pay a small deposit and pay for the item every month with no interest added. The item remains the property of the store until you’ve paid for it in full. Each lay-bye agreement is different, but all include three or more payments. Once you’ve paid for the item in full, the seller will give it to you.

Advantages

    • A lay-bye is a great way to buy big items such as TV’s, fridges, furniture and jewellery without resorting to credit.
    • The right plan can help you manage your payments and stick to your budget.
    • The seller may not charge interest on the price of the item, cannot charge you for storing it and cannot increase its price.

Disadvantages

    • You can’t bring the item home until it’s fully paid for.
    • If you’re late in making a payment, the seller can send you a written notice stating how you’ve failed to meet the requirements of the agreement and give you 14 days to pay. If you don’t make the payment in time, the seller may cancel the lay-bye agreement, charge the agreed cancellation fee (usually10%) and deduct it from the money you’ve already paid. The seller should then refund the money that you’ve paid on the lay-bye within 14 days of the cancellation.
    • If you cancel a lay-bye contract before the goods are delivered or if they’re damaged when you receive them, the store generally keeps 10% of the money you’ve paid before it’s refunded to you.

Contract
A lay-bye contract must be clear and easily understandable and include the following details:

    • Full description of the goods purchased
    • Total price of the goods purchased
    • Amount of the deposit paid and outstanding balance
    • Date on which additional payments are due, for example weekly or monthly
    • If any cancellation fees apply, and how they are calculated
    • Seller’s details, trading name and street address
    • Any other terms or conditions.

Before opening a lay-bye, make very sure you can afford the payments, that you understand the fine print and know the terms of the agreement so that you don’t run into unexpected – and unpleasant – surprises.

For more information contact the Education Division via the Department of Trade and Industry, Customer Contact Centre at 0861 843 384 or write to Consumer Complaints, Consumer and Corporate Regulation Division, Private Bag X84, Pretoria, 0001.

 

Sources

www.choice.com.au
www.moolanomy.com
www.ombudsman.ombudsmen.co.za