Lay-bys: What you need to know


21/06/2018 Walking past a store and seeing a pair of shoes or rug that you really want but are not in a position to afford can be quite a painful experience. However, the lay-by system presents an attractive solution to this unpleasant situation. This method of purchase allows you to have a particular basket of products set aside until you have fully paid the total cost off over a predetermined period, without interest.

Most stores will require a deposit of 15% for instance and give you three months to pay. Typically, you will receive a payment schedule detailing the minimum amounts you must pay at a particular date. If the store does not give you any minimum amounts or due dates for payments then you should ask the store to clarify them for you.

Sold, missing or damaged lay-by

The jeans or couch that you lay-by remain the store’s responsibility until you have paid the final amount. A store can’t claim that you lay-by a particular item ‘at your own risk’ - meaning you will have to accept it as is and they will not be responsible if it is damaged or sold during the normal running of their business.

If you finalise your agreement and the lay-by package or basket is missing, the store should offer you a comparable alternative or an item of superior quality. But what happens if the item is no longer in stock or your size is unavailable? The store should then refund you double the total amount you have paid or that amount plus interest (the prescribed rate of interest is currently 10%). The CPA gives you the choice, the store can’t force you to accept an alternative product if you want a refund.

Cancellation and refunds

Whether it is a simple change of mind or you can no longer afford the installment, the CPA entitles you to cancel the agreement at any time. The store must then refund you the amounts you have paid after deducting a cancellation penalty (which may not exceed 1% of the total cost of the purchase). It is also the store’s responsibility to inform you beforehand of the applicable penalties should you cancel the agreement. If they neglect to do this, the CPA prohibits them from penalising you.

Some stores may try to refuse your refund if you cancel the agreement a day or two after the specified payment due date or purchase completion. This practice is not at all legal - in fact, the CPA’s provisions will apply as long as you cancel the agreement within 60 business days of the anticipated agreement completion date. If for example, you miss a payment, you have 60 business days to cancel the agreement.

Owing to the general apathy of the South African consumers, many stores still take chances by refusing to give customers a refund and forcing them to accept something else instead, or keeping more than they should as a cancellation penalty. Remember, the CPA is only a powerful tool if you speak up and exercise your rights when you find yourself in these unfortunate situations!

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