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Buy Now Pay Later: When Later Comes Around

Buy Now Pay Later: When Later Comes Around – Contents

During the festive period, many shoppers will turn to Buy Now Pay Later (BNPL) services to ease the costs of Christmas.

Credit cards have historically been a popular way of getting items before paying for them, although this comes with its negatives.

Compared to Buy Now Pay Later services such as Klarna, credit cards usually have a large interest rate attached to them.

Regardless of which BNPL service you use, failing to pay these back will have credit reference agencies penalise you in future.

More than 17 million people have actively used BNPL options, highlighting that it may be a safe service to use.

Although pay later loans can be beneficial when used carefully, many should be aware of their dangers.

Failing to pay loans on time can see customers facing debts and lower credit scores in the future.

As an award-winning debt recovery agency, DCBL know more than anyone how vital it is that you pay on time.

We have created this expert piece of advice on the consequences of missed payments.

What Is Buy Now Pay Later?

Buy Now Pay Later services have been around for years, and quickly rose in popularity in 2020. This was due to people increasing their spending over lockdown and others facing reduced income.

It allows customers to take away items then and there but will pay the cost later on. Most of these services are interest-free, so no extra cost is added for the service when used correctly.

Its rise in popularity has meant that a huge number of retailers, both online and in-store, utilise BNPL. This includes large companies like ASOS, John Lewis, GiffGaff, Samsung, H&M, AO, Pandora, and more.

Clothing, beauty products, furniture, electronics and many other products can be purchased through Pay Later loans. You can either pay the full amount at a later date or spread the cost into smaller monthly instalments.

Many retailers only conduct a soft credit check before approving these loans although some can leave a hard check.

Buy Now Pay Later providers won’t track your spending or check your ability to pay the loan in the future. This means you should make sure you can afford to make the repayments before committing.

What Happens If You Can’t Pay Later?

Buy Now Pay Later Loans

Sadly, UK residents have now racked up approximately £4.1 billion worth of debt from unpaid BNPL services.

With debts often rising during the festive period and many turning to Pay Later, this figure is likely to rise.

When you miss a payment, most providers will allow a short period of time when you can still make the payment.

Once outside this time, you may be hit with late payment fees, which may negatively affect your credit score.

Some may add a lump sum to the amount owed or slowly increase the penalty fees until they receive the money. If left long enough then some BNPL companies will instruct a Debt Collection Agency to retrieve the debt.

It is best to check the small print and read up on the policies in these instances before accepting the loan.

Contact your creditor to form a resolution if you find that you can’t make the next payment.

The Future of Buy Now Pay Later

The Bank of England says households will spend on average over £700 more in December. Debts rise over this period and using Buy Now Pay Later options will see these carried over into the new year.

Concerns about the rising level of debt have led to the government implementing regulation by the Financial Conduct Authority (FCA).

This helps protect customers and provide additional protection and fair treatment, however, this won’t take effect until 2022 or 2023.

It has its benefits, however, caution is needed to ensure you don’t end up in a bad financial position.

Buy Now Pay Later loans should only be taken out if you are 100% sure you can afford them.

If you are having doubts about whether you can upkeep payments, get in contact with our support teams today.

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