Learn the art of buying now and not paying later
IN the last few years, a very old form of credit – ‘buy now, pay later’ (BNPL) credit – has had such a dramatic makeover that it’s almost unrecognisable from the old shop credit you might have used to buy a sofa on an interest-free deal in the past.
Lately, this new form has come in for a lot of attention, not all positive. And complaint levels are increasing, with around 5,000 complaints in just six months this year. So what’s the deal?
THERE ARE TWO MAIN TYPES OF BNPL DEAL:
However, if you don’t return the goods on time you could find you’ve bought them. Limited instalments: The most well-known form of BNPL deal works by letting you pay in a limited number of instalments interest-free. This means you can buy things up front that you may not have the money for in full at point of purchase. However, you have committed to buy.
Credit agreements: These deals are closer to the older BNPL deals in that you pay in instalments over a longer period and pay interest. This isn’t as high as some retailers charged in the past – it’s usually less than credit card interest, for example – but is still higher than a standard bank loan.
OLD BNPL credit is the longerterm deal offered by retailers through their own credit schemes, which allows you to pay for goods over a fixed period of time, usually two or three years, though longer for
‘big ticket’ items.
These deals may come with THE problems occur when you an interest-free can’t pay. While period where no BNPL firms may interest applies if not charge debt (and it’s a big if) interest, Resolver’s you pay the full users have told us amount during this they are often quick period. Otherwise to pass on debts to interest applies. debt collectors who These deals are Don’t fall prey to have a whole range usually regulated. debt collectors of penalties and
New BNPL credit pressure tactics. is usually provided by a thirdMany of the complaints we’ve party credit firm at the online heard have come from people ‘till’. It allows you to pay in a who’ve had debts passed on for variety of ways for goods and relatively small sums. services. But the issue that’s proved
However, some deals are not most contentious is the way regulated. The big firms in this some retailers have sold these sector are Klarna and Clearpay. deals as lifestyle products rather than a financial commitment that has penalties. Many people have objected to retailer websites encouraging people to spend money they don’t have with little warning about consequences.
Others have highlighted how easy it is to get into debt with multiple retailers or lose track of what you’ve spent if you’ve got a number of deals running.
Ultimately, like most things, be cautious before spending money you don’t have – and seek help if you’re worried you can’t pay.
If you have a problem with credit, loans, or buy now pay later deals, Resolver can help. Get in touch at resolver.co.uk
HOW NEW BNPL CREDIT WORKS
WITH money tight, there’s been an explosion in new BNPL credit deals in the last two years. So much so that it’s unusual to not have the option to pay this way when buying from a major brand online.
Try before you buy: This is where you have time – usually 28 days but sometimes as low as 14 days – to try goods before committing to buy them.
Of course, you can’t go out in a frock, then send it back, no matter what see on Instagram. These deals allow you to try things on, check goods out and see if they work for you before committing to buy.
SOUNDS GOOD... SO WHAT’S THE PROBLEM?