Layby vs hire purchase

I’ve been doing some higher-end mystery shops of late: jewellery, luxury fashion. They’ve been awesome experiences, actually. The staff know their stuff and when it comes to making suggestions for improvement, I really don’t have any ideas to offer. In fact, one of the surveys went so well I very, very nearly went through with the purchase (and if New Zealand had strong return policies I probably would have). This wasn’t one of those surveys that included purchase, or purchase followed by return. Just one of those teasy ones where you pull out at the very last minute.

Luxury retail, SoHo

Luxury retail, SoHo (Photo credit: La Citta Vita)

One thing they always make a note of is to mention a layby option. I never really understood this until I got older and realised that some people spend hundreds of dollars on a single item of clothing. (Personally, the most I’ve ever spent is under $200, on a coat, and a pair of a boots respectively.) Since the big bad GFC, layby is apparently making a bit of a return to the retail scene.

If you’re not familiar with the term, layby involves the shop putting aside the item for you. You pay weekly instalments toward the balance – usually interest-free – and once it’s paid for in full, that’s when you finally take it home.

For those who can’t pay in full upfront, I think it’s a great option. It beats paying 20 percent interest on a credit card, that’s for sure. And I certainly am not going to argue with a system that promotes delayed gratification (something I think our generation lacks a little, myself included).

Then there’s that other beast – hire purchase, offered on bigger-ticket items. Electronics. Appliances. They’re not such a good deal, in my view.

I did consider taking out a hire purchase on one of my laptops. It was a lovely interest-free deal, and interest rates were high enough that I figured I might as well keep money sitting in my account as long as possible.

But digging down into the fine print, I found upfront fees and annual charges that totally wiped out the interest-free carrot. And that’s why I whipped out my credit card, took the rewards points, and took the savings hit.

I can see in some situations this might also be preferable to carrying a credit balance, depending on the specific numbers. But I don’t anticipate a hire purchase ever worming its way into my list of financial liabilities.

9 thoughts on “Layby vs hire purchase

  • Reply lkrant May 2, 2012 at 13:26

    A long time go, I did some surveys for a restaurant chain. It was fun becasue I enjoyed the meals as well.

  • Reply Michelle May 2, 2012 at 15:06

    I enjoy certain mystery shops also. Especially the food ones!

  • Reply Shawanda Greene (@TheyCallMeCheap) May 3, 2012 at 01:28

    Initially, I didn’t know what you were referring to in your title. Here in the United States, layby is called lay-a-way. I’m assuming a hire purchase is similar to store financing. Sounds like the deals are pretty much the same. A lot of furniture stores will offer 0% interest if you pay the balance of the loan off in full within, say, a year. But if you don’t, you have to pay ALL of the interest you would’ve owed had you not made any payments at all.

  • Reply Kellen May 3, 2012 at 02:01

    We call it lay-away here. I’m not sure what “hire purchase” translates to… but I don’t usually buy stuff on store credit. I do like Billmelater for bigger items like laptops (if they have a 6-month-interest-free deal on). I make sure I have enough money when I make the purchase to spend right away, but then you don’t really have to give up the money for 6 months.

  • Reply Earth and Money May 3, 2012 at 03:01

    I really want to give mystery shopping a go this fall. I have a friend that does it and it always sounds like a great gig. Did you find it hard to get started, or were you able to consistently get jobs right from the get-go?

    • Reply eemusings May 3, 2012 at 10:27

      Some companies (here at least) get jobs at a certain time of the month; others email them out. Either way you need to be quick to snap up the plum ones! Certain shops have certain requirements (some you can control, like doing some training – some you can’t, like demographics). There’s nothing stopping you getting started – it may just take a little while to make it work best for you.

  • Reply Sense May 4, 2012 at 16:34

    Y’all, hire purchase is rent-to-own or leasing in the US. As in Rent-a-Center, where you can lease a washing machine or laptop for a year and end up paying three times its value just for a low monthly payment.

    • Reply eemusings May 4, 2012 at 16:51

      Would that be closer to DTR here (renting whiteware appliances, sometimes to own, sometimes just a lease) than hire purchase?

  • Reply John | Married (with Debt) May 5, 2012 at 05:16

    That would be fun to mystery shop in some high-end stores. That way I could pretend to have money while making money. Layaway is making a comeback in the USA.

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