Which term describes a plan where a consumer reserves an item and pays over time before taking possession?

Which term describes a plan where a consumer reserves an item and pays over time before taking possession?

• A. Layaway plans
• B. Deferred Billing
• C. Installment Purchase Contract
• D. Service Charge

Answer: (A)

Layaway plans describe a method where a consumer reserves an item and pays over time before taking possession. With layaway, you hold the item at the store, make installments until the total price is paid, and only then receive the merchandise. This helps with budgeting and avoids using credit or paying interest. It’s different from deferred billing, which postpones payment after a purchase or service; from an installment purchase contract, where you typically take the item home and pay over time (often with interest); and from a service charge, which is simply a fee for a service rather than a payment plan.

Layaway plans describe a method where a consumer reserves an item and pays over time before taking possession. With layaway, you hold the item at the store, make installments until the total price is paid, and only then receive the merchandise. This helps with budgeting and avoids using credit or paying interest. It’s different from deferred billing, which postpones payment after a purchase or service; from an installment purchase contract, where you typically take the item home and pay over time (often with interest); and from a service charge, which is simply a fee for a service rather than a payment plan.