If you’re someone who often finds it difficult to make large lump sum payments for goods or services, you may have looked into “Buy Now Pay Later” services.

Buy now pay later means that, rather than paying in a full lump sum payment for a product or services rendered, there may be an option to pay through instalments of a certain amount over a set period to make the sum of the full amount in total. This method should allow you to pay in full for the product or service without potentially straining your finances – you pay back what you can, as agreed upon when you begin the buy now pay later service.

Some popular buy now, pay later services include Afterpay, Zip Pay, Brightepay, and some credit card networks such as  Mastercard and Visa, which can offer you BNPL arrangements.

Though it can be a convenient, immediate solution, it may be challenging to juggle the necessary repayments with other financial commitments. It’s not always the most appropriate method for people, and you should bear in mind your situation and ability in paying back the amounts.

Before you sign up, keep in mind:

• It becomes easier to overspend with buy now pay later services, so know your limits on what you can and can’t afford.
• You will be charged fees and costs to use the service, which can add up to a princely sum in and of itself.
• Keeping track of your payments can be tricky if you’ve signed up for multiple services.
• It could affect your loan applications for a car or mortgage as lenders consider buy now pay later spending just as much as your credit score.
• Late repayments can appear on your credit report, which affects your ability to borrow money in the future.
• Layby can be a cheaper alternative to buy now pay later, with no account-keeping or late fees to consider
• Some BNPL services may charge interest on late repayments, so bear that in mind when deciding whether or not to purchase.

If you are someone who could make use of BNPL services, you may wish to:

• Ensure that when using the BNPL service, you stick to a set limit on what you spend so that you can comfortably pay it back later.
• Aim only to have one BNPL account at a time to manage payments through, rather than confuse yourself with multiple payments across different providers.
• Always budget for bills, loan payments and BNPL payments, and
• Rather than use your credit card for payments to your BNPL account, consider linking to your debit account instead.

If you would like assistance in managing your budget or some friendly advice, see us for a chat about what we can do for you.