A lay-by agreement lets you buy a product and pay for it in two or more instalments before taking it home. It’s important for you to understand what the written agreement covers and how you or the business can cancel it.
An agreement is considered to be a lay-by if you:
- pay for the products in at least two instalments (when the agreement is called a ‘lay-by’), or pay for the products in at least three instalments (when the agreement is not specifically called a ‘lay-by’), and
- do not receive the products until the full price has been paid.
Any deposit you pay is an instalment.
You must get a copy of your written lay-by agreement that states all terms and conditions, including any termination fees that may apply.
You can cancel the lay-by agreement at any time before you receive the products.
If you cancel the lay-by, the business must refund your deposit and all other amounts you’ve paid except for the termination fee.
Where your payments don’t cover the termination fee, you will have to pay the fee.
Businesses can only cancel lay-by agreements if:
- you’ve broken the agreement, for example, you failed to pay instalments
- they are no longer trading
- the product is no longer available and this is outside of their control.
Follow these tips to protect your rights when buying through a lay-by or instalment payment system.
- Before signing the agreement and paying your deposit, make sure you read and agree with the terms and conditions, including payment dates, amounts and any extra charges you’ll have to pay if you decide to cancel.
- Keep copies of the agreement and receipts for the deposit and all instalments in case there is a problem later.
- If you have a problem with a lay-by agreement, try to resolve it by discussing it with the business first. Refer to your written agreement and receipts for evidence if necessary.