Layaway On Coins. Good or Bad?

JohnMaben

I've battled with this for years. A fair number of buyers want it. I've always stayed away from it. My reasons might be somewhat controversial. The last time I was involved in layaway's was in the 80's working for a major dealer in classic coins. Our "failure" rate was about 20%. By that, I mean the transaction was not completed for some reason on the buyers part. Even though the initial deposit was supposed to be non refundable the reasons given from the buyer were usually related to some misfortune, hense we usually refunded.

My reasoning (here's the controversial part) is that if a buyer needs layaway they probably shouldn't be buying coins. When I was a kid we were middle lower class on the money scale. My parents would use layaway for items such as clothing or maybe a new washer and dryer. Staples if you will. Coins are not "needed" by anyone. I've always believed that the money used to buy coins should come from savings not future earnings. On the one hand I feel like I am doing the thinking for the buyer here, on the other hand I feel like I am protecting them from themselves.

Does anyone else feel the same way I do about this. Can anyone that feels differently present a viewpoint that supports layaway on coins that I may be missing? I understand that some may be financially responsible even though they choose layaway, but as a seller I have no way of attempting to screen them from those that live week to week or worse.

Thoughts appreciated.

John

ajaan

I've bought one coin in the last 40 years on layaway. It was a coin that is somewhat scarce and I didn't have the available funds immediately available. I didn't want to see the coin, a scarce British VIP proof, sold to someone else so I used the dealer's layaway plan.

lasvegasteddy

it allows some to get into bigger coins
it allows some to sell bigger coins

it is a personal choice thing...no right(good)...no wrong(bad) reply here

many in the past have allowed me such opportunity
i've allowed others the return opportunity too

i just sold my triumph chopper to a guy who took over 4 months to complete the transaction and was happy to do so as he was the one who should of bought it
great guy

Unknown

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JamesM

I understand your dilemma, but I do not think it is the dealers place to estimate a clients economic situation.

As a dealer you are expected to offer your clients many things, but I personally do not feel this is one of them.

Possibly an option to appease both your needs and those of your clients would be to offer layaway as a unadvertised option only to clients you have a existing working relationship with.

Potentially that would both lower the failure rate and lower the risk of someone buying a bit more than they should.

bronzemat

Some of my higher end U.S. coins & ancients were bought via layaway. Both were offered from online dealers.

If it wasnt for the layaway option I would have missed out on some of my current favorite pieces.

I also tend to shop dealers more who do offer it.

dragon

<<< I understand that some may be financially responsible even though they choose layaway, but as a seller I have no way of attempting to screen them from those that live week to week or worse. >>>





I actually have friends that make well into 6 figures that basically live week to week. Aren't there stats that show Americans have the lowest savings rate as a percentage of earnings out of any major economy in the world and definitely out of any G-7 nation? Aren't there also some kind of stats that show most Americans are only 3 or 4 paychecks away from being in a state of severe financial hardship. In view of this, and also considering how many people run up their revolving credit cards on totally frivolous non essential items I don't think it's necessarily a bad idea to purchase things like coins on extended terms. JMO

Broadstruck

I regularly sell with a 30,60,90 day terms option and honestly can't recall the last time a buyer didn't opt for some sort of terms. I too have purchased some of the higher priced items I own via terms, as it offers me a chance to own such without the initial impact. As a seller I've sold some higher single or group lots that my buyers couldn't afford otherwise. As long as the payments are made as scheduled without needed to haunt the buyer for them I have no absolutely no issue selling this route.

COALPORTER

".... is that if a buyer needs layaway they probably shouldn't be buying coins"

Agreed! You are looking for whale customers to toss out money , not Kmart shoppers !

mingot

I don't live hand to mouth. My house is paid off, my cars are paid off, I have no credit card debt.

I do have a coin budget, though, and I don't like to break it.

I could definitely see myself taking advantage of a long term lay-away plan (which is really just an interest free loan) if there was a high dollar coin I HAD to have -- especially if the alternative was taking money out of a longer term and interest bearing investment.

Of course, this may actually reinforce the notion that you should not offer layaway, because at worse you're putting someone who can't afford the coin behind the 8 ball, and at best you're giving an interest free loan to someone who probably CAN afford it if they were willing to make some hard choices.

Good luck with your choice, I am sure it's a tough one.

beartracks42

I have used Dealer layaway to purchase a few coins. I use it to help manage my money. I am retired with a decent IRA, which generates extra income above what Social security and my pension brings each month. My wife and I use this income to do some things like travel, which we could not otherwise afford. So, I use layaway to buy better coins from time to time, to keep from withdrawing funds from my IRA, and reducing its earning power. I see nothing wrong with layaway for me. JMO.

Staircoins

I understand your position - but also the perspective of a buyer wanting to pay over time on a high dollar item so as not to let it slip away.

Here's something else to consider, though. There is a danger in establishing a layaway plan on items where the market value is changing rapidly ... such as those where bullion prices affect their pricing, or limited mintage new issues. Hypothetically speaking, do you really want to have customers who began a layaway on a $1500 item faced with paying it off, knowing that the same item's value has dropped by half over the six-month term of their layaway?

Ahrensdad

John,
I am a show dealer doing small local shows, but I've done major shows as well. I have several customers at the local level that I will do layaway with. Usually they put some money down and the length of the layaway is flexible. Usually they are at the point where they are down to the last couple coins to finish a set, and the price is usually pretty high. They want to complete the set, but don't want to or can't shell out $1k or $2k at any given time for a coin. They can however budget several smaller payments which allows them to justify the price tag and not put themselves in financial harm. Without this option, they would be hard pressed to finish the set. I don't make the judgement call for them about affordability, that's up to them to determine that.

I have never had an issue with someone not completing the layaway transaction. I know them, and see them frequently. I would be less inclined to offer this option to someone I don't know, or via the internet. With so many payment options available, I'd prefer them to avail themselves of those and avoid the cancellation headache. I have to think the 20% cancellation rate might even be higher today, leading to potential hard feelings and maybe even the loss of a customer.

As a side note, I too remember my mom using layaway for cloths and household items we needed because she didn't have the money. It was a real life saver for us.

Andrew

TwoSides2aCoin

Good for some, bad for others.
If you're paying a premium for clad quarters, half dollars or prezzie bucks from the U.S. Mint, a layaway program is probably not very wise. I know everytime these items are purchased from the Mint using a credit card, it's imperative to pay that card off before the grace period expires. I've already lost at least forty percent of the value coming out of the chute.

claychaser

Here's what I see as a "good" layaway:
Collector wants to stretch to buy a truly rare or key coin for a set, and desirable examples rarely come up for sale. The coin is priced fairly, its a choice and original example, and it makes sense in the collector's focus. The collector has an accumulation of a handful of duplicates with the same or greater value at wholesale to cover the cost of the target coin, but the dealer of the target coin does not make a market, or cannot use the collector's coins. A lawaway makes sense to allow the collector to sell off his duplicates at better prices than a firesale to raise cash.

Here's a "bad" layaway:
A purchase to speculate on bullion or coins thinking that they are posed for a sharp run-up in value. If values go down, then the dealer either eats the loss or makes the customer mad by insisting that the customer holds to the original deal.

Unknown

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Broadstruck

<< <i>IMO 30, 60, 90 isn't a layaway plan. 30 days is a normal purchase and 60 and 90 days is very nice extension but not a layaway as described here. >>



Interesting but I've seen dealers offer 60 days as their standard Layaway term option.

TwoSides2aCoin

In the shop, there are times when collectors come in and put a few dollars down on a coin. The only times I do not like doing this for customers is with gold. Any drop and they want a discount. Any rise and they expect it at their buy price. On one occasion I had to inform the customer that it is not "BOUGHT" yet. Bought means it's paid for. Layaway with a commodity that rises and falls like gold is risky business, and can actually hurt both buyer and seller.

joebb21

I've offered layaway before- and like others have mentioned, it allows more budgeted people to buy coins they normally cant.

Also, enforcing a penalty fee of x% for canceling can be helpful in this case.

A contract is a contract.

MrHalfDime

I certainly understand your stance on not allowing layaways for coin purchases, reasoning that the money used to buy coins should come from savings not future earnings. However, comparing coin purchases to those of clothing or home appliances might not be a valid comparison. Assuming that a customer would only ask for a layaway for a major coin purchase - one that would involve a larger than normal amount of money that he might not have in savings - then allowing a layaway to the right customer might be in order. Unlike the home appliance, which can always be purchased at a later date, and will always be in stock at the local big box store, the expensive, and presumably scarce, coin may not be available again for a considerable amount of time, if ever. Allowing this customer to make payments over time may allow him the opportunity to purchase a coin that he would otherwise never be able to do, and will certainly create good will and a happy customer. Providing layaways to the right customers may prove beneficial to both you and your customer.

pennyannie

I see nothing wrong with lay a ways, looks like it would be a good thing to increase sales. As a buyer i would be more concerned with the company i was laying with. You have the money and the product, what is so bad about that? I have tried to lay a way a few guns but after a week i had to have it in my hands.

Sonorandesertrat

"...My reasoning (here's the controversial part) is that if a buyer needs layaway they probably shouldn't be buying coins. ..."

In >99% of the cases, you're probably correct. There are times, however, when knowledgeable collectors---people who know an exceptional opportunity when it presents itself---do borrow money or use a lay-away option to finance a purchase. John Pittman famously mortgaged his family home so that he could buy coins in the auction of the King Farouk coins. Should a collector having average skills borrow money or use lay-away? No.

mkman123

I'm the layaway king on the forum here....ask the members I have had transactions with layaway is very helpful

Bochiman

John,

I would say layaways for ultra-moderns/bullion are not things I would get into....too much inherent price fluctuation one way or another and more apt for speculation by the buyer and running away if things tank (think housing market).

For things past that, then it can go as members have said.....allow for one to stretch their coin budget (ie....instead of budgeting $200/mo and waiting for 6 months to buy a coin they see NOW and want and that may not be there in 6 months, they can lock the coin and pay their budget monthly).

At the end of it, I think you either need ironclad terms and so much upfront, and non-refundable, to make it worth it, or you should be very wary.

Kove

I get asked once or twice a month if I have a layaway program for coins. If they are a good customer and the coin is >~$2000, I will give them 60 days. If they are relatively unknown to me, my usual reply is that in this day and age, credit cards are largely fulfilling the role of a short-term loan. For unknown customers or less expensive coins, I'd rather take the 2.2% credit card hit and let the buyer worry about paying off their card on their own schedule.

rec78

I agree with those that say not to allow it for bullion sales. However, As a buyer i use it only for coins that are not readily available or that cost over a certain amount say $2000. I used lay away to buy my 1901-s quarter-not because i did not have the money available, but because I just did not feel comfortable spending $2000 all at once on one coin(they have since gone up in value). Four hundred down and four hundred a month worked well for me and I got a valuable coin from a well known dealer. When you are used to spending less then $200 a month on coins and that special coin comes along that you need to finish your set - one that costs more than your normal budget-layaway is the way to go. Some dealers even let you dictate the terms as long as they are not unreasonable.
As for the amount of time I would say that anywhere from 3 months to a year is reasonable sometimes. Anything over a year seems to be too long. JMO.

Bob

mrearlygold

It all depends on the individual deal but we deal in different coins. Not everybody's liquid for 25-100k+ and often it's a big one that is found when we're most illiquid. So certainly I offer layways on an individual basis and sure I'll do them whether they're 6 figures or on the coins that are only a couple thousand bucks if it's making someone happy, the terms are fair and on time. Promote or advertise an offer of layaways in general to the masses? Probably not.

airplanenut

I'm not sure anything I'm going to write is novel at this point, but here's my take as a seller and collector.

I've never offered layaway, mainly because I sell on consignment and I don't want to delay my ability to pay a consignor. Sometimes a buyer will say that their payment is going to be slightly delayed (no biggie) because they're on a limited income and waiting for the next check to come/clear. I'm not going to tell them how to budget, but if they're just squeaking by, my opinion is they shouldn't be spending money on coins. But I digress.

While I've never used layaway, I can think of why I would. I know my income and I know my expenses, and I can rather easily project them well into the future, taking into account what I'm going to move to savings and not touch shy of a catastrophe. If a coin came about that I absolutely wanted, but I knew it would stretch me thin to buy outright, I might ask for the layaway just to keep my bank account from getting temporarily lower than I'd be comfortable. This is not quite the same as spending money I really don't have, as I know I could get it from other sources (heck, I could borrow it from myself using those savings accounts I don't want to touch) and I know the money is on its way. I also wouldn't be buying many (or any) other pieces during this time--my coin money would all be put to this one big purchase.

The key is that I would use this only in the case of a coin I couldn't easily get again. It's not that the price may fluctuate a little here or there, but rather, I can get the coin now, or it will be purchased by someone else and off the market for a long time. I would never use layaway for a generic item.

So in your case, John, I see both sides. While some issues you have could be downright common, others may be from limited mintages or collector sets that are harder to find, and someone may not be able to find another in 3 months (or it may be a bit difficult, though I'd argue it's certainly easier to find an item that is relatively the same over the issue, rather than that one type coin that hits every requirement just right).

So depending on the item, buyers may be looking for layaway just to keep within a normal budget, or they may be putting themselves in a dangerous position. I'm not sure there's a good way to check, but perhaps you could try layaway as an experiment. Don't advertise it and just accept some (or all) upon request. If it goes well, consider making it a known option. Over time, you can adjust the terms as you figure out which scenarios are likely to result in success. I would be careful about layaway with bullion, though, unless it's crystal clear that the price is absolutely fixed, and no refunds/reductions will be given if the value drops.

Jeremy

okracer

I have bought just a few coins on Layaway. It does require discipline and a solid plan to not over-extend oneself.........

Cool story: I had one dealer at a show allow me a payment schedule that we both liked, then he handed me the coins to take home. I said that these weren't paid for, but he insisted that I keep the coins and make the payments. This was our 1st transaction, and I was shocked. All went very well, payments made, etc.

A year later, I bought a 5 figure coin from him, with a 6 month payment plan, and he told me to take the coin now, and just do the payments. It was nice to develope a relationship with a seller that allowed me to do this.

.....just one story that went well......

garrynot

20% sounds very significant when dealing in high end merchandise and loss of potential sales. Do you screen lay-away buyers like auction participants by asking for references?

messydesk

I've never used layaway for coins. It would have to be one heck of an opportunity presenting itself and I'd have to be certain that the money I need to close the sale would be there soon, even though it isn't on hand at the moment. For example, something on an out-of-town bourse floor is $5000, I have $1000 available and some bullion in the SDB I can liquidate for the rest within a couple days of returning home. I would need good references from the seller, and would expect they'd want them from me as well.

Broadstruck

<< <i>I'm the layaway king on the forum here....ask the members I have had transactions with layaway is very helpful >>



mkman123, Is in "The Circle Of Layaway Trust"

illini420

<< <i>

<< <i>I'm the layaway king on the forum here....ask the members I have had transactions with layaway is very helpful >>



mkman123, Is in "The Circle Of Layaway Trust" >>

Lakesammman

As an owner of coins that a dealer was offering to a 3rd party, it can be a real PITA.

BG

I've bought several coins with "terms."

The business owner sets those "terms" and as an honest person I have to ensure that I can meet those terms, or move on.

If it's a "fresh" coin I understand that terms may not be available.

It's fair to ask for references.

I have met all terms that I have agreed to.

JohnMaben

Thanks for all the comments. Up to this point (this may change) we don't sell much that would be considered purely bullion but many if not most items are bullion related or semi-numismatic. If I operated from a storefront I would offer layaway but 99.9% of our sales are from people we've never met or seen. A few have mentioned suggesting credit cards and we do that but in almost every case the customer does not want to use a credit card either because they do not have one, they are maxed out, there wife will find out, or who knows what.... Usually I can just make a decision and move on but this is an issue that keeps coming up, I keep re-evaluating, and I keep coming to the same conclusion. Better not to do it. I could screen the customers based on past purchases but venture to say most asking for layaway would be first time buyers or have only made small purchases. Maybe at some point we will make it available on selected items only and with very clear terms. Even then, if a credit card is used for installments the customer will always win in a dispute if goods were not shipped and even when they are shipped in some cases. Someone questioned the 20% failure rate I mentioned, that was based on experience from many years ago but I doubt it would be different now especially in this less than ideal economy.

John

AMRC

My only problem is the additional work around accounting. But I take them because they seem to work for the collector. I have never had a problem with one not completing. I try to be very clear about the terms. But I really do not know what I would do until one went bad. It really wold depend on the circumstance.

It is not my character to judge if someone's ability to buy coins just because they use lay-away.

nibanny

<< <i>I'm the layaway king on the forum here....ask the members I have had transactions with layaway is very helpful >>



True!


Sorry for the dumb question but a layaway isn't a sale for which you get a certain percentage upfront and the balance splitted in few payments?
The worst that could happen is that you miss the sale but get to keep the first payment.
Did I get it wrong?

Shamika

<< <i>I've always believed that the money used to buy coins should come from savings not future earnings. >>



I couldn't agree more with this statement.

Cougar1978

I consider layaways bad both buying and selling.

As a dealer I don't do layaways or the hassle they involve. If they do not have the money to buy a coin, then they should downscale and focus on something affordable for them. I think coins over $300 are simply too expensive for many people and at that level there are a lot of other things like entertainment and appliances competing. I think coins are a hobby where some have taken pricing to an absurd level having recently witnessing a situation where a plus coin in the same grade was priced 6 times higher than the non plus in that dealers inventory. It distresses me to see people who can barely make ends meet using credit cards to buy coins. Have the prices in the bid sheets exploded to justify this stampede - no.

I had one fellow who blew out all his nice expensive coins at Teletrade and now buys nothing but primarily raw world coins $50 and under many close to melt. He tells me he has never been happier with the hobby and that the expensive slabbed coins drove him to bankruptcy - "the bids weren't even going up and there I was paying 30% inerest on them after paying 50% above bid or more just bc they were stickered or plus."

jmski52

if a buyer needs layaway they probably shouldn't be buying coins.

Bingo.

lkeigwin

I hate debt, and if I don't have the money, or a source for it (i.e., selling something else) I don't buy it.

Friendly dealers offer payment over time (not a layaway). I pass on that too.

There's altogether too much debt in this world, IMO.
Lance.

nibanny

<< <i>if a buyer needs layaway they probably shouldn't be buying coins.
>>



While I basically agree with this, it is not always true. If a coin doesn't show up so often and the buyer, at that time, allocated his resources somewhere else, a layaway may do the trick to buy it!

tightbudget

<< <i>if a buyer needs layaway they probably shouldn't be buying coins.

Bingo. >>



This. If I can't afford a nonessential item without whatever I've saved, then I shouldn't be buying it.

melvin289

I have used lay-a-way before with a large dealer half the country away from me. He has offered to send me the coin, or coins, and I would have them while making the payments. I have always refused this option as I am single and if anything happened to me no one would know I owed the money. I couldn't go to my reward and rest in peace knowing that my favorite dealer had been shorted.

Ron

PerryHall

Layaway makes sense when it's a once in a lifetime opportunity to buy that special coin and you can comfortably afford the payments. Otherwise, it's not a good idea.

jesbroken

As long as the seller and the buyer are agreeable beforehand to the term of the layaway in writing(which should include
the seller retaining the coin inhand until the layaway is finalized and paid for) what could be the downside.
The seller has a better chance to remove inventory they might be struggling to remove at a satisfactory
price and the buyer may gain access to a coin or coins whose pricepoint may be above their normal buying
point, thus relieving inventory and increasing ones collection value. Isn't that the main goals of buying and
selling? Note I said agreement beforehand, thus covering an event such as failure by either party to the
premature closing of the agreement. I just do not see an issue. I have used such a system with forum sellers
before(usually for a group of coins-3 to 10) to insure the coins not being gone by the time I have the funds.
It has been quite helpful to me and to the seller. JMO
Jim

DrPete

The most familiar terms I am aware of are three payments, an initial one and two additional at 30 and 60 days. Under this scheme, most people will complete a transaction.

This question has been around for a long time. I know my grandmother, a collector, bought her most financially significant coin in the mid 1960's, a "gem" High Relief $20 on payments for a total of $600 or so. She paid it off over time and I have some of the receipts that I keep as a momento. When the coin eventually became mine I had it certified as PCGS MS 62, it had a bit of flattening of the knee. Grandmother was not of much financial means, but she taught piano lessons and at 35 cents a lesson, she was able to buy some coins. She was able to take advantage of a longer-term payment plan and got a very important coin that way.

johnny9434

theres only one dealer that i do that with. it just leaves me uncomfortable to do that with many ( they up and leave, die, lose the product, etc etc )

123cents

<< <i>

<< <i>if a buyer needs layaway they probably shouldn't be buying coins.
>>



While I basically agree with this, it is not always true. If a coin doesn't show up so often and the buyer, at that time, allocated his resources somewhere else, a layaway may do the trick to buy it! >>

MVC

<< <i>if a buyer needs layaway they probably shouldn't be buying coins.

Bingo. >>



I would generally agree with that statement, but if you have a steady income, and you are not taking food of the table, extending your CC bills, then maybe it is not that bad so that one can buy that coin they always wanted. My fear is the uninformed buying overgraded "investment" coins.