Layaway vs Hire Purchase Payment Method
Layaway and Hire Purchase are two different types of payment methods that customers can use to purchase goods or services.
In the retail space, these two types of payment methods are for persons who cannot purchase the product in full and prefer to make partial payments until the product or item is paid off in full.
Layaway or Balance Parcel Payment
This is an agreement between the Customer and the Business. Where the customer has agreed to make a partial payment towards the item(s) in the business, and in turn the business places the product away for the customer so the item cannot be resold. The item stays in the store while the customer continues to pay towards the item until the item is fully paid off fully. Once the final payment is completed, the item is then given to the customer. A Layaway Payment normally extends for 3 months or 6 months, to the customer who is making the purchase. As well as there are normally no interest charges.
Hire Purchase Payment
This is a credit agreement between the Customer and the Business. Where the customer has agreed to make monthly or weekly installments on an item in the business, and the business in turn gives the item to the customer to be paid for a period. The customer will be able to use the item while they continue to make payments toward it. The duration for such payment may extend from 3Months, 6Months, 1 Year, or 2 Years. This type of payment may require the Customer to sign a legal agreement between the Customer and the Business. As well as this type of payment method normally leads to added interest during the agreed payment period.
Conclusion
In conclusion, Layaway plans allow customers to make payments over time, but they can’t take the item with them until the final payment is made. Hire Purchase plans allows customers to take the item immediately, but they have to make payments over time and they don’t own the item until they make the final payment, with additional interest.
As for our company L.C Sawh Enterprises Ltd, we only use the Layaway / Balance Parcel form of payment for our goods at the store. Click on this link to learn more about our Layaway Payment Plan.
