There are times when you may want to buy something and rather than paying for it in one go straightaway, you want to spread out the cost into manageable instalments. This is where buy now pay later schemes can be useful.
Buy now pay later can also be convenient if you want to try before you buy. You can order or buy several versions of the same item (such as a dress in difference sizes and colours), decide which you want to keep and then return the rest without having to pay for them.
What is buy now pay later?
Buy now pay later schemes do exactly what they say – you get the opportunity to buy something now without having to pay for it in full until a later date. Schemes vary and the delay period for spreading the cost of goods can be anything from 30 days up to three months.
How much does buy now pay later cost?
In general, if you pay for the goods you bought within the delay period you won’t pay any interest. That’s because these periods are usually interest-free.
If you use buy now pay later carefully you could delay paying for something for several months and not pay a penny in interest. Many of the big firms won’t charge you any interest if you clear your balance before your delay period is up – even if you only pay the day before.
Alternatively, some offers allow you to spread the cost over a longer period but you may be charged interest for this.
Don’t miss a payment
Because of how buy now pay later works it can quickly become expensive if you don’t make your repayments on time as there may be late payment fees. Depending on the lender, missed payments could also be recorded on your credit report and be seen by a prospective lender.
So it’s a good idea to set yourself calendar reminders and alerts to make sure you clear the debt before interest is added.
Does buy now pay later affect credit scores?
For guidance on buy now pay later and credit scores, see our more detailed guide.
Not eligible for buy now pay later?
Buy now pay later providers may check your creditworthiness before deciding whether to approve your application, including your credit score and if you can afford to take on more borrowing.
If you’re refused buy now pay later credit, see our guide on why companies refuse credit applications.
It’s well worth checking your credit score before you apply for buy now pay later to see if there are any problems you can fix to improve your score.
What are the alternatives to buy now pay later?
Used correctly, buy now pay later can be a convenient way to pay for goods without having to part with your cash straightaway. And it’s usually interest free. But there are other ways you could do this.
For example, you can apply for a credit card with an interest-free deal on purchases and spread the cost of paying for items over several months without paying a penny in interest. The advantage of a credit card over buy now pay later is it can be used in most stores so you can spread the cost of several items rather than just one. With buy now pay later each new purchase is usually recorded on your credit report as a new credit agreement.