A lay-by agreement is when you pay for goods in at least two or three instalments, and do not receive the goods until the full price has been paid. Any deposit you pay is considered an instalment.

Lay-by agreements are 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 eight 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.

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What you can expect

A lay-by agreement is a form of contract.

Like any contract, lay-by agreements must be in writing and specify all the terms and conditions, including any fees and termination charges.

Some lay-by agreements 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.

You must be given a copy of your lay-by agreement. It is your responsibility to read the contract before you sign it. Keep this for your records and in case you need to refer to it during a dispute.

Learn more about contracts.

Cancelling a lay-by agreement

If you cancel

The business must refund all payments, except for the termination charge.  If the lay-by payments paid do not cover the termination charge, they will ask you to pay more.

The business can charge a termination fee if you decide to cancel a lay-by agreement.

The amount of the fee must not be more than the ‘reasonable costs’ relating to the agreement.

For example, if you lay-by a winter coat in June but decide to cancel the agreement in August, it may be more difficult for the store to sell the coat at the end of winter. The termination charge could take into account any need to discount the coat.

If the supplier cancels

A business should 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.

Have a problem?

  1. Contact the business in the first instance and explain the problem. If the matter is complicated and not urgent, you could write an email or letter. We have tips and sample letters to help you.
  2. If you’re unable to resolve the matter with the provider, you can contact us for help on 13 32 20 or make a complaint online.

Be a savvy consumer

Follow these tips to protect your rights when buying through a lay-by:

  1. Before signing the agreement and paying your deposit, make sure you read and agree with the terms and conditions, including payment dates and amounts, and any extra charges you’ll have to pay if you decide to cancel.
  2. Keep a copy of the agreement, as well as your receipts for the deposit and all instalments in case there is an issue later.

Further information

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