A lay-by agreement lets the customer pay for a product in two or more instalments before taking it home. The deposit is the first instalment. Any purchase paid for with at least three instalments is legally considered a lay-by.
The customer must be given a copy of the agreement that shows all terms and conditions, including cancellation fees.
Record of payments
Customers must be given a copy of the lay-by docket or a receipt that shows:
- the item
- the start date, due date of last payment and pick up date
- lay-by number
- record of the deposit or payments
- what happens if the customer doesn't pay on time
- the procedure if the business cancels the contract.
Cancelling the lay-by
A business can cancel a lay-by if the customer breaks the agreement - eg a missed payment.
If a customer cancels the lay-by, the business can charge cancellation fees to cover costs that can be proven, but only if the fees have been written into the agreement. Costs can include things like storage, depreciation and administration.
Tips for using lay-bys
When using lay-by to buy something:
- make sure you read all of the contract and agree with the terms and conditions before you sign and pay your deposit
- keep copies of the contract and all payment receipts
- talk to the business if you have a problem with a lay-by agreement and refer to your contract and receipts as evidence.