Money Wellness
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Buy now pay later – is it a safe way to borrow?

Buy now pay later (BNPL) lets you delay paying for online purchases. It’s an extremely popular form of credit and is offered by providers like:

  • Klarna
  • PayPal
  • Clearpay
  • Amazon

But is it a safe way to borrow? In this guide we explore the pros and cons of BNPL and when using this form of credit can be problematic.

What is buy now pay later?

Buy now pay later lets you delay paying for your online shopping in two ways. You can either:

  • put off paying for a purchase for 14-30 days
  • ‘slice’ the cost of a purchase into smaller amounts to pay off over a number of months

Why shoppers like buy now pay later

With BNPL you don’t have to wait until you have the money in your bank to go online shopping. If you’ve come across a deal that’s only available for a limited amount of time and you’re waiting to be paid, this can be useful.

BNPL is also popular among online clothes shoppers who want to try on their purchases before they hand over any money. If you don’t like the way something fits, you can send it back before any money changes hands.

Why shops like buy now pay later

Shops like to offer BNPL as customers are less likely to abandon their shopping basket. But let’s think about that. Why would you abandon a shopping basket if there wasn’t a BNPL option available and complete the purchase if there was?

Is BNPL encouraging shoppers to live beyond their means?

Regularly using BNPL to shop online can make it difficult to keep track of your money. It’s easy to forget how much you’ve spent and when payments are due. This is especially true if you choose to slice payments over a number of months.

Because BNPL is such a quick and easy way to shop, there’s the risk that you could end up borrowing more than you can afford to pay back.

Are you charged interest on buy-now pay-later purchases?

You’re not usually charged interest on buy-now pay-later purchases. But lenders will more than likely start adding interest and charges to your debt if you fall behind with your payments.

What happens if I miss a BNPL payment?

If you don’t pay on time, buy-now pay-later providers are likely to add interest and charges to the amount you owe.  If you don’t pay at all, they can use the same methods to collect what you owe as other unsecured debt lenders. This includes:

  • passing your debt to a debt collection agency
  • getting a county court judgment against you

What should I do if I can’t afford a buy-now pay-later payment?

If you can’t afford to make your agreed payments, you should contact your BNPL provider as soon as possible to see how they can help. If you’re struggling with money generally, find out how we can help.

Can I use buy now pay later while I’m on a debt solution?

You’re not usually allowed to take out further credit while you’re on a debt solution. This means using BNPL is probably against the rules. If you’re on a debt management plan or an individual voluntary arrangement, you should speak to the company managing your debt solution before using BNPL.

Taking out credit without getting permission could result in the failure of your debt solution.

Things to think about before using buy now pay later

It’s important to treat BNPL like any other form of credit and resist the temptation to borrow more than you can afford.

Before making a purchase, ask yourself:

  • have I got the money for this item in my weekly/monthly budget?
  • could I wait until the money I need is in my bank account?
  • do I really need this item?

If possible, it’s better to save money in advance before making a purchase. You could try:

  • selling unwanted items to raise the money you need
  • cutting back in other areas to help you save

Spending too much on buy now pay later?

If you’re struggling to keep up with buy-now pay-later payments, it could be a sign you need debt help. You don’t have to deal with your money worries alone. We’ll be happy to help.

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