Is Buy Now Pay Later a Good Idea?

Buy now pay later (BNPL) is a payment option which is becoming increasingly available online as an alternative to paying in full. Buy now pay later works by allowing you to pay back the provider rather than pay the retailer directly straight away.

What does buy now pay later mean?

Buy now pay later means that you can buy items while spreading the cost instead of paying it all in one go. Some examples of buy now later pay later providers are Laybuy, Klarna, and PayPal.

How does buy now pay later work?

Simply put, the buy now pay later provider pays the company, and then you pay back the BNPL provider later, often in instalments. Every buy now pay later payment scheme may work differently, so it is recommended to always read and understood the terms and conditions of each individual scheme.

Where can you buy now and pay later?

Buy now later options on website, as well as buy now pay later apps are becoming increasingly common. These are becoming popular as credit options, which may be an alternative to paying costs up-front. Buy now pay later schemes are the fastest growing online method of payment, according to This is Money.

The Klarna BNPL option is accessible on many shopping websites, including clothing shops such as Boohoo and New Look, and retailers which sell a variety of items such as Amazon. It is also possible to shop directly on Klarna to access all of the brands which use the Klarna buy now pay later option in one place. Paypal similarly introduced their own by now pay later loans in the UK, as per Global Banking and Finance.

Does buy now pay later affect your credit score?

Often buy now pay later may not do hard credit checks on you when you apply to use them as a payment option. Nevertheless it is important to remember that buy now pay later can still impact your credit score negatively if the repayments are unaffordable and you miss payments or pay late.

Is buy now pay later a good idea?

Unlike many other credit loans or other financial products which are subject to regulation by the Financial Conduct Authority (FCA), buy now pay later is currently unregulated. This may mean there are more risks to consider. It could also mean that some buy now pay later schemes may not run affordability checks to ensure that repayments are affordable for you when you agree to the payment option.

It is often a good idea to pay for any products up front rather than on credit if you can afford to. The question of whether buy now pay later is a good idea should be answered depending on your personal circumstances. This includes whether you can afford the repayments and whether you will be able to make the payments on time. If you will struggle to afford the product or are tempted to overspend by the accessibility of credit from buy now pay later options, you should consider avoiding them.

How to buy now and pay later

If you still want to use buy now pay later options after carefully considering the risks, then it may be worthwhile to remember that although it may seem like buy now pay later means there is more money available due to the credit, you still have to pay back the balance eventually.

Although BNPL means you can purchase items that you may not necessarily be able to afford right now and pay for them later, you should only purchase what is affordable for you. Find out what the charged interest rate and terms and conditions are for the BNPL scheme before deciding on whether to use it.

If you need help with managing your finances and existing debts, you can contact Debt Support Centre.

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