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What is a lay-by?
A lay-by is where you:
- pay for something in at least two instalments (when the agreement is called a lay-by) or at least three instalments (when the agreement is not stated to be a lay-by), and
- do not collect your purchase until the full price has been paid.
If you pay a deposit, this counts as an instalment.
The store must give you a copy of the lay-by agreement. This must:
- be written in plain language, legible and clearly presented
- state all terms and conditions, including any fees for cancelling the lay-by.
Cancelling a lay-by
You can cancel a lay-by at any time before you collect the item.
The store has to give you a refund for the payments you have already made.
They are allowed to charge you a reasonable cancellation fee, if this is outlined in the lay-by agreement.
Lay-by price has changed
If the price of the item changes, for example, if the item is now on sale you still have to pay the price shown in the lay-by agreement, unless the store agrees to sell you the product at the new price.
You can choose to cancel the lay-by, but you may have to pay a cancellation fee – check the terms and conditions in the lay-by agreement.
Late payment of lay-by
If you do not pay the outstanding amount, the store may cancel the lay-by.
If this happens, they must refund any money you have already paid (minus any cancellation fee).
The store can charge you a cancellation fee (also known as a termination charge) if:
- the store has kept their part of the lay-by agreement, and
- you have simply changed your mind and decided you no longer want the lay-by.
The store cannot charge you a cancellation fee if:
- the reason the lay-by was cancelled was not your fault and the store has not kept their part of the lay-by agreement. For example, the product was not delivered by the time stated in the lay-by agreement; or
- the store cancelled the lay-by.
Cancellation fees can only cover the store’s reasonable costs resulting from the lay-by. These costs can include any drop in the product’s price (for example, because it has been discounted).
A cancellation fee needs to be stated clearly and legibly in the lay-by agreement.
If your lay-by purchase comes with a warranty for a set period (for example, 12 months or three years), the warranty period begins when you finalise your lay-by contract and take ownership of the product.
Example: Sue lay-bys a food processor on 30 January. It has a 12-month manufacturer’s warranty. On 31 March, she pays her final lay-by instalment and takes her food processor home. It is covered by the manufacturer’s warranty for 12 months from 31 March, not 30 January.
Last updated: 18/06/2013