Lay-by and your consumer rights
Lay-by agreement can be a good way to buy goods by making payments in instalments. Our advice will help you understand lay-by contracts.
How lay-by works
A lay-by agreement is a type of contract when you pay for goods in at least 2 or more instalments, and you do not receive the goods until the full price has been paid.
Any deposit you pay is considered an instalment.
Lay-by agreements may be helpful when you are making a big purchase and don’t want to pay with credit. They allow you to distribute the cost of an item over a longer period – often 8 to 10 weeks.
The item you want to buy is put aside, so no other customer can buy it while you pay off the cost.
Lay-by contracts
A lay-by agreement is a form of contract.
Like any contract, lay-by agreements must:
- be in writing
- specify all the terms and conditions, including any fees and termination charges.
The business must give you a copy of your lay-by agreement.
Before signing the contract
Remember:
- It’s your responsibility to read the contract before you sign it and pay the deposit. Make sure you agree with the terms and conditions. This includes payment dates and amounts, and any extra charges you’ll have to pay if you decide to cancel.
- Keep a copy of the agreement and your receipts (deposit and instalments) for your records, and in case there is an issue later.
Learn more about contract and your consumer rights.
Price and fees
Some lay-by agreements may include service fees and require instalments to be paid on certain dates.
When you enter a lay-by agreement you agree to pay the price of the item at the time you signed the contract. If the item goes on sale later, you are still required to pay the original price you accepted in the agreement.
Cancelling a lay-by agreement
If you cancel
The business can charge a termination fee if you decide to cancel a lay-by agreement.
The business must refund all payments, except for the termination fee. If the lay-by payments paid do not cover the termination charge, they will ask you to pay more.
The amount of the fee must not be more than the ‘reasonable costs’ relating to the agreement.
If the supplier cancels
A business must not cancel a lay-by agreement unless:
- you have breached a term of the agreement, such as missing a scheduled payment
- they are no longer trading, or
- the goods are no longer available due to circumstances outside the trader’s control.
In the event that a business cancels the lay-by agreement due to closing down or the goods are no longer available, the consumer is entitled to a refund.
Resolving issues
Contact the business and follow our 3-step process to resolve the issue.
If you are unable to resolve the matter with the business where you have a lay-by agreement, learn more about resolving a dispute.
Making a complaint
When making a complaint, you should include:
- details of the issues you are experiencing
- copies of any correspondence that shows how you have tried to resolve the matter.
How Fair Trading will handle your complaint
Your complaint will be reviewed to determine the most appropriate resolution. This may include:
- providing you with information to help resolve your complaint
- recording the complaint issues to assist in future compliance programs, or
- contacting the other party to try and resolve the dispute.
You can lodge a complaint:
Online
If you cannot resolve your matter, submit your complaint by using our form.
By mail
Post your complaint form and documentation to:
NSW Fair Trading
PO Box 972
Parramatta NSW 2124
Ask a question
If you are unable to find the information you need, you can call us between 8:30am to 5pm on Monday to Friday. You can also use our form to make an enquiry.