How does buy now pay later work?

Quick answer: Buy now pay later (BNPL) is a type of credit, which means you’re borrowing money and agreeing to repay it over time. You’ll usually choose it at checkout, then either split the cost into regular payments or pay the full amount after a set period. Many BNPL plans do not charge interest if you stick to the repayment plan. But missed payments can lead to fees, debt collection, and marks on your credit report, so always check the terms before you buy.

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 BNPL schemes can be useful.

BNPL 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 different sizes and colours), decide which you want to keep and then return the rest without having to pay for them.

We’ll cover what BNPL is and how it works. We’ll also go over the other things you need to know, such as whether BNPL affects your credit score.

What is buy now pay later?

BNPL 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 does buy now pay later work?

If you select BNPL at the checkout, the BNPL provider pays the retailer for you. You then pay the BNPL provider back over time. As long as you keep to the agreed payment plan, you won’t normally pay interest or fees. But if you do miss a payment, you could be hit with late charges.

Does buy now pay later affect your credit score?

Yes, it can do. Some BNPL firms may carry out a hard credit check, which can affect your score. Though soft credit checks, which don’t affect your score, are more common.

Some BNPL purchases may also appear on your credit report, and missed payments could be recorded and seen by future lenders. Your credit report shows your credit history, which lenders use when deciding whether to offer you credit. Keeping up with repayments can help protect your score. Missing them could harm it. See our full guide on what affects your credit score.

Can you use buy now pay later with bad credit?

BNPL 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 are refused BNPL credit, see our guide on why companies refuse credit applications.

It is well worth checking your credit score before you apply for BNPL to see if there are any problems you can fix to improve your score.

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. But if you miss payments, you may face fees.

If you use BNPL 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.

Some offers allow you to spread the cost over a longer period, but you may be charged interest for this.

What happens if you miss a buy now pay later payment?

Because of how BNPL 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 other lenders.

So, it’s a good idea to set yourself calendar reminders and alerts to make sure you clear the debt before interest is added.

What are the new buy now pay later rules from 15 July 2026?

From 15 July 2026, most Buy Now Pay Later providers will be regulated by the Financial Conduct Authority (FCA). This means they must follow the same standards as other consumer credit firms, giving customers greater protection if something goes wrong. Here’s what it means for you:

• Extra consumer rights: From 15 July 2026 onwards you get powerful Section 75 protection with BNPL, just like you do with credit cards. It means that if something goes wrong with what you buy, the BNPL firm is jointly liable with the retailer. Section 75 only applies to items costing over £100 and not more than £30,000.
• Clearer information: BNPL firms will provide exact payment dates and make clear what happens if payments are missed. They must also offer repayment options and point you towards free debt advice services if you’re struggling.
• Affordability checks: Lenders will check you can afford a BNPL purchase, even for smaller amounts.
• Right to complain: If you feel you have been treated unfairly by a BNPL provider and aren’t getting anywhere, you can complain to the independent Financial Ombudsman Service .

Unfortunately, any BNPL agreements taken out before 15 July 2026 will not benefit from this extra protection.

What are the alternatives to buy now pay later?

Used correctly, BNPL 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 BNPL is it can be used in most stores so you can spread the cost of several items rather than just one. With BNPL each new purchase is usually recorded on your credit report as a new credit agreement.