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What to Consider When Using Layaway to Buy an Engagement Ring

What to Consider When Using Layaway to Buy an Engagemnet Ring or Wedding Ring What to Consider When Using Layaway to Buy an Engagemnet Ring or Wedding Ring

There are many financial risks and potential pitfalls when it comes to engagement ring financing. Luckily, layaway provides a low-risk option for ring shoppers — as long as you're willing to wait.

Is layaway the smartest option for your engagement ring purchase? Read on to learn how layaway works, as well as the pros and cons of this setup.

How Does Layaway Work?

Compared to many financing plans, layaway is a relatively straightforward option.

Here’s how it works: First, choose the ring you want. Then, make a down payment (this amount varies, but is generally about 10 to 20 percent of the ring’s price).

Next, you make scheduled payments directly to your retailer until you’ve paid the ring off, at which point you can take it home.

Most layaway plans require monthly payments for six or ten months, although some payment periods are shorter or longer.

There are a few fees associated with layaway plans:

  • Service fees: Retailers charge a $5-10 service fee for administering your layaway plan.
  • Cancellation fees: If you change your mind or cannot finish paying for your ring, retailers likely will charge a cancellation fee. The good news is they’ll also refund what you’ve already paid in cash or store credit.
  • Restocking fees: If you cancel your plan, retailers will move your ring from layaway back into their inventory and charge a restocking fee for their trouble.

What Are the Benefits?

Like all financing options, layaway comes with pros and cons. Here are some of the benefits of layaway plans, particularly for shoppers with low credit scores:

1. No Strict Requirements

Layaway is unique in that it does not require a credit check – or even an income check. Simply prove that you’re at least 18 years old and provide a down payment, and you’re good to go.

If you have the income to afford monthly payments toward a ring, but your credit score works against you, layaway can be a good alternative to credit cards.

2. It’s Not a Credit Card

While many engagement ring shoppers choose to open a credit card with a 0% APR introductory rate, credit cards come with financial risk. The more lines of credit you have, the more vulnerable your credit score becomes. Additionally, many shoppers end up owing huge amounts of interest because they make minimum payments or miss a payment and lose their promotional rate, or fail to pay off their balance by the end of the promotional period and must pay deferred interest. (Deferred interest refers to the interest that accrues in the background while a cardholder enjoys an interest-free promotional period. If he ends the period with a balance – even one dollar – he must pay all the interest he thought he avoided.)

Since layaway does not involve borrowing, shoppers can sidestep some of the problems with credit cards.

3. No Interest

Your layaway plan’s service fee is probably much less than the interest you’d pay on a credit card purchase, lease-to-own setup, or personal loan.

With that in mind, layaway can be a money-saving option.

4. Peace of Mind

Found the perfect ring, but worried someone will buy it while you save up?

Layaway lets you reserve your ring while you pay it off, so nobody beats you to the punch.

Some retailers even offer layaway plans for online purchases, so you can skip the crowded stores and hard sells.

What Are the Pitfalls?

While a great option for many, layaway is not without its issues. Here are some of the drawbacks of layaway plans:

1. The Waiting Game

Most financing options allow you to take your ring home right away and pay it off over time.

With layaway, however, you’ll likely have to wait six months to a year to bring that ring home.

For some, that delay is no big deal. But if you’re itching to pop the question, waiting can be tough. Limited wedding venue availability, the desire to start a family, or plain old excitement are all reasons you might choose to skip the waiting game.

2. Down payments

If you need a financing plan because you don’t have the savings to pay for a ring out-of-pocket, the down payment on your layaway plan could be a financial stretch. For example, a 10 percent down payment on a $5,000 ring would be $500 – a large sum for most shoppers.

3. Rigid Payment Terms

If you can’t fully pay off your ring by the ending date of your layaway plan, the retailer might simply release your ring to other buyers instead of giving you more time.

Furthermore, some plans require you to make layaway payments in-store. This small inconvenience could become a big pain when you’re trying to make it to the jewelry store in the middle of a busy week. If you miss a payment, the retailer might cancel your payment plan and sell your ring to someone else.

4. Potential Costs

If you find a ring you like better, your financial situation changes, or you decide against proposing, you will be on the line for whatever cancellation and restocking fees your retailer charges.

5. Limited Availability

Not all retailers offer layaway plans, and some only offer it for rings above a certain price point.

Popular Retailers with Layaway

The terms of layaway plans vary widely from store to store. Before you set up a layaway plan, make sure to research your retailer’s terms and confirm you’re getting a plan that fits your budget.

Here’s a breakdown of layaway terms at a few popular jewelry stores:

Kay Jewelers

  • In-store or online: In-store only
  • Down payment: Depends on purchase amount
  • Payment plan: Monthly payments, must be paid in full within six months
  • Cancellation terms: Depends on store location

Helzberg Diamonds

  • In-store or online: In-store only
  • Down payment: 10% of purchase amount
  • Payment plan: Monthly payments, must be paid in full within ten months, payments must be made in person at store location
  • Cancellation terms: May cancel any time with full refund

Reeds Jewelers

  • In-store or online: In-store only
  • Down payment: 10% of purchase amount
  • Payment plan: Monthly payments must be at least one-sixth of purchase price, must be paid in full within six months
  • Cancellation terms: Depends on location

Is There a Better Option than Layaway?

While layaway provides an excellent interest-free financing option, there's still a payment plan that's no-credit-needed and zero-interest without the waiting and large down payment.

Gage Diamonds offers interest-free financing to anyone with steady income and a checking account with few overdrafts. Unlike layaway, there's no down payment required, and you can bring home your ring as soon as you set up your payment plan.

So if you just can't wait to pop the question — or don't want to pay a hefty down payment to secure your dream ring — consider financing with Gage Diamonds. Gage will never charge interest or turn you down because of poor credit, and you can even have your ring serviced or sized for free in the first six months before you've paid in full.

To learn more or apply for financing, visit Gage's financing page.