The rules of lay-by: Getting your goods without the burden of credit

The financial stress brought on by the Covid-19 pandemic has forced consumers to make plans to afford goods that they cannot afford to pay for in one action.

With many consumers heeding the advice to stay away from more credit, or simply not qualifying for credit anymore, lay-by transactions offered by retailers make it a bit easier to afford goods such as school uniforms.

Lay-by is easier for cash-strapped consumers because it does not involve credit checks and interest and they are also protected by provisions in Article 62 of the Consumer Protection Act about lay-by.

A lay-by transaction is concluded when a retailer agrees to sell something to you that you pay off in periodic instalments before the retailer hands it over to you when you have paid the full amount.

The provisions of Article 62 ensure that your instalments are protected while you are paying off the full amount, that the goods you are buying are kept for you and what happens if the goods are not available anymore, as well as what happens if you want to cancel the transaction.

ALSO READ: Over-indebted consumers, jittery lenders: what is happening to the credit market?

Your payments

Each amount you pay to the supplier stays your property in terms of Section 65 of the Act, which states that retailers cannot treat your money as their own and must look after it with the degree of care, diligence and skills that can reasonably be expected of someone managing the property of someone else.

Your goods

The retailer is responsible for the goods until you have paid the full amount and receive the goods.

If the retailer cannot deliver the goods when you have paid the full amount, the retailer must give you the choice to accept similar or better goods.

If you do not want the replacement goods, the retailer must refund you with double the amount paid if the retailer could have done something to make sure it is available.

If it was not the retailer’s fault that the goods are not available, you must be refunded with interest from the date you made the first payment.

“Beyond the control of the supplier” in this section only applies if the supplier could not have prevented the problem.

ALSO READ: Parents, ask the right questions about your child’s school uniform

Cancellation or failure to pay

If you cancel the agreement before full payment or fail to pay within 60 days after the date that the last payment was due, the retailer can charge a penalty fee of no more than 1% of the total purchase price.

The retailer must give you written details of how the penalty was calculated, unless you state in writing that this is not necessary. After deducting the penalty fee, the retailer must refund the rest of the money you paid.

Retailers are not allowed to charge a penalty when your failure to pay is due to your death or hospitalisation or in any other case, unless the retailer informed you of the penalty before entering the agreement.

For more news your way, download The Citizen’s app for iOS and Android.