Lay-by and 'buy now pay later' schemes


A lay-by is an agreement between a consumer and a business where:

  • the goods will be paid for over a period of time
  • the consumer agrees on a fixed sale price and payment conditions
  • the consumer does not take the goods until the payments are finalised.

Make sure you read the terms and conditions before signing anything or paying any money.

The lay-by could be anything from one week to many months. The business must then hold the goods for that period of time.

An agreement is classed as a lay-by if:

  • the goods are paid for in three or more instalments
  • the business calls the agreement a lay-by, even if the consumer pays in only two instalments.

Agreements must be in writing and should contain:

  • what goods are being purchased
  • how much they cost
  • how much deposit was paid
  • how long the lay-by will last (maximum)
  • what cancellation and refund policies apply.

Cancelling a lay-by

If you cancel a lay-by agreement, the business:

  • must refund the money paid
  • may charge a termination fee, only if it was in the agreement.

A termination fee can only cover the costs of the lay-by.

A business is not allowed to break a lay-by agreement unless:

  • the consumer breaks one of their terms
  • the business has closed down
  • the goods are no longer available for reasons the business can’t control (they can’t choose to remove the goods from sale).

You are entitled to a full refund if:

  • the business closes down
  • the goods are no longer available for reasons they can’t control.

'Buy now pay later' schemes

'Buy now pay later schemes' are becoming more popular with consumers and retailers in Australia.

Schemes such as zipPay and Afterpay allow you to buy goods now and pay for them later without needing the cash upfront or a credit card. The schemes have different repayment methods such as linking to a debit card or directly to a bank account where regular instalments are charged.

What to watch out for

  • Be careful to not over-commit. You can easily make a large number of purchases without having to part with your cash upfront.
  • Make sure this financial option suits your current situation. Often there is no credit check done when you sign up.
  • Make sure you have enough money in your bank account to cover the repayments. If you unable to pay any of the instalments, or pay the amount in full by the end of the term, you will pay a penalty and late fee.
  • Compare the interest rate and penalty rates applied by these schemes with other credit options.

Related information

Updated: 16 Aug 2022

This page has been produced and published by the Consumer Building and Occupational Services Division of the Department of Justice. Although every care has been taken in production, no responsibility is accepted for the accuracy, completeness, or relevance to the user's purpose of the information. Those using it for whatever purpose are advised to verify it with the relevant government department, local government body or other source and to obtain any appropriate professional advice. The Crown, its officers, employees and agents do not accept liability however arising, including liability for negligence, for any loss resulting from the use of or reliance upon the information and/or reliance on its availability at any time.