![]() There are lots of companies offering buy now pay later on consumer purchases in the UK. In either case, failing to repay what you owe can result in significant fees - not to mention the cost of the interest that could accumulate on the debt. Interest is more likely to be applied if you opt to repay in smaller instalments over a longer period of time. In many cases, consumers won’t have to pay interest on the credit, provided that they make repayments within the specified interest-free period. The cost of buy now pay later varies from provider to provider. It is expected that borrowers will eventually be able to escalate complaints about this form of borrowing to the Financial Ombudsman Service, but this form of borrowing remains unregulated and potentially risky in the meantime. Many of these are young people between the ages of 18 to 34 – a group that BNPL providers target heavily.įortunately, the UK government has now taken steps to bring BNPL lending under the supervision of the FCA. A report by Citizens Advice shows that 40% of those who’ve used BNPL in the last 12 months are struggling to settle what they owe. This has left some shoppers with growing liabilities and regular calls from debt collection firms. Some BNPL providers have even been known to market themselves to retailers as a way to encourage the public to spend more than they ordinarily would. BNPL is therefore safe in theory, but providers are not currently authorised or regulated.Ĭitizens Advice describes BNPL as a “slippery slope into debt”, and has revealed that most people who use it don’t know what they’re signing up for. ![]() This is despite calls from the government for the Financial Conduct Authority (FCA) to protect consumers. While BNPL lending solutions are popular, this form of borrowing is currently unregulated. You get the items you want, while securing extra time to pay the balance. It’s practically the modern version of ordering a product from a catalogue account. Certain providers also allow consumers to pay for their purchase in instalments – which are sometimes known as ‘slices’. These agreements often come with an interest-free period, with the total balance due a certain number of weeks or months after the date of your purchase. While you can get your hands on the latest products without paying for them upfront, you’re really taking out credit that covers the cost but must be paid back in the future. ![]() In short, BNPL is actually a form of borrowing. It’s sometimes described as paying in instalments, but it also covers a range of other credit products. Buy Now Pay Later allows you to make purchases without having to pay until a later date. ![]() Instead, your payment is deferred until some point in the future. Put more simply, it’s a way to buy something without having to pay for it there and then. It effectively means borrowing the cost of an item and paying the sum back after a delay period. What is Buy Now Pay Later?īuy now pay later (BNPL) is a term that is commonly used to describe store finance. In this article, we explain what Buy Now Pay Later is, how it works, and whether there are any alternatives out there. In fact, some debt charities have even warned that users of Buy Now Pay Later financing and how people can end up in debt and struggling to pay their bills. These payment schemes have been around for quite some time, but they’ve become particularly popular of late as people look for new ways to fund their purchases both online and in-store.ĭelayed payment options might seem attractive when you’re walking away with a full bank account AND an armful of new products, but they aren’t the best choice for everyone. If you’ve spent any time online recently, you’ve probably come across the phrase ‘buy now, pay later’.
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