What is a layaway plan?

A layaway plan is indeed a purchasing method where consumers pay in installments before receiving the product. This option allows individuals to select an item and reserve it by making a series of payments over time. Once the total cost is paid, the consumer can then take possession of the item. Layaway plans are particularly useful for those who may not have the funds available for an outright purchase at the moment but wish to ensure that they can secure the product they want without the risk of it being sold to someone else.

This structured payment approach does not usually involve interest charges, differentiating it from loans or credit purchases, as consumers are not borrowing money to make the purchase. Since the complete price must be paid off before receiving the product, layaway plans prevent consumers from acquiring debt associated with impulse buying or immediate gratification that may come with credit purchases.

Other choices describe financial mechanisms that either involve loans, interest rates, or specific limitations on purchases which do not accurately reflect what a layaway plan entails.