Should I use a ‘buy now, pay later’ finance service?

We’ve seen many different financial innovations over the years and as the consumer credit market continue to evolve and change it is no surprise to see that over the past decade or, so consumers have been hit with promotions that allow them to ‘buy now, pay later’. For a population that had been hit hard by the credit crunch and suddenly unable to easily take out a line of credit, this seemed like a marvellous idea. Here, we take a look at what this finance plan is, and whether or not it should be treated as a viable option for those of you looking to finance specific services and products without the up-front cash to pay for it now. Alternative to ‘buy now, pay later’ include using a credit card, your bank overdraft or seeking out a fast cash loan that you can pay back at a rate that suits you.

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There are loads of buy now, pay later providers on the market today and on the face of it they do offer a service that is very helpful to consumers. They strike up partnerships with different retailers and provide credit upfront for consumers to take advantage of, allowing them to complete the purchase of the product or service they desire and pay back the sum in fixed instalments or at the end of an agreed period.

How it works is the consumer shops for the item they are looking for online, gets to the checkout and are then given a few different payment options. The first is to checkout and make payment in full using your debit or credit card. The other options include a buy now pay later option. If you click on that, you’re taken to the platform of the provider, where they assess whether or not you are a credit risk and approve the credit if they are satisfied that you are a responsible borrower. You’ll then be provided with dates and exact repayment terms (including interest) for you to repay the credit taken out. In most cases you are asked to pay back the total in 3 or 6 months, or maybe in 3 simple monthly payments rather than in one go.

Buy now pay later offers instant credit to a consumer, it allows flexibility in repayment terms, but you always have to be careful to look at the small print and work out whether the repayment terms are suitable to you. Other options that you could look at include taking out a payday loan from a responsible payday loan lender, as this might be less money than you end up paying back for a buy now pay later product, and it might allow you to cover some other essentials that you need cash for before payday. Alternatively, credit cards and overdrafts are used for purchases such as this, but as with the other financial services it is so important that you have the means to pay back any credit you have agreed and not to get stuck in a cycle of bad debt.