Buy Now, Pay Later (BNPL) is a way to buy things and spread the payments out over time. You do not pay full price up front, but you may end up paying more in the long run.
How does Buy Now, Pay Later currently work?
Buy Now, Pay Later gives you a flexible way to buy a product or service in -store or online.
You might see that Buy Now, Pay Later is often referred to as ‘Deferred Payment Credit’ (DPC). This is the formal name for Buy Now, Pay Later which you will usually see in any small print and in credit agreements.
- It is an interest-free form of credit, where you make repayments over 12 months or less
- You might need to pay a deposit upfront
- If you do not pay off the full amount within 12 months, interest will usually start to be added
- It gives you a flexible way to shop without having to pay for something in full straight away
Using BNPL means you agree to pay back:
- The full cost of whatever you buy, and
- Any charges for late or missed payments
Some Buy Now, Pay Later companies also charge interest or service fees. Make sure you carefully check the terms of your agreement.
Is Buy Now, Pay Later right for you? Affordability checks
For anything you buy using BNPL, a lender will carry out a credit check. This is to make sure you can afford the repayments.
If you miss payments on a BNPL agreement, then these will show on your credit score.
Missed payments can make it harder to get credit in the future.
IMPORTANT: Before buying using BNPL, always read the terms of the credit agreement so you know the repayment period and when interest could be added. You will often find that the agreement refers to BNPL as ‘Deferred Payment Credit’
Changes to the law
The government has introduced new rules for Buy Now, Pay Later (BNPL) from 15 July 2026. These laws give you more protection when you use BNPL.
Buy Now Pay Later now has similar protections to credit cards, which are covered under the Consumer Credit Act. The Consumer Credit Act is an important law that covers most types of lending in the UK.
It sets out rules on:
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- How businesses can lend
- How they collect money
- What your rights are when you borrow
Find out more about your rights and protection when you have debts covered by the Consumer Credit Act
The new rules on Buy Now Pay Later mean you will get clearer information about any extra fees. You will also have stronger rights if anything goes wrong.
The new rules came into effect on 15 July 2026. If you have made a purchase using Buy Now Pay Later before 15 July 2026, these rules will not apply to you.
A summary of the new BNPL rules:
Clearer information about the Buy Now, Pay Later agreement
Providers now have to provide you with clearer information before you buy something using Buy Now Pay Later. This includes:
- How much your payments will be
- When you must make payments by
- What happens if you miss a payment
Affordability checks for every purchase
Before you use Buy Now, Pay Later, the lender will check if you can afford to pay the money back
- They will do this for every purchase, even if it costs less than £50
- These checks help make sure the repayments are affordable for you
- They can also help stop people from taking on more debt than they can manage
Better support if you are facing financial difficulty
If you miss a payment, lenders must contact you to explain what will happen.
If you are struggling or in financial difficulty, they also need to:
- Show you where you can get free debt advice
- Consider giving you longer to repay or removing extra fees
Protection if something goes wrong
You will be covered under Section 75 of the Consumer Credit Act.
- This means your Buy Now, Pay Later provider and the retailer are both jointly responsible if anything goes wrong
- You can ask for a partial or full refund if goods do not arrive, are faulty, or the retailer stops trading
- his applies to items costing over £100 but not more than £30,000, in the same way it does for credit cards
- This will only apply to new BNPL agreements made from 15 July 2026 onwards. Anything you bought using BNPL before this date will not be protected
Access to the Financial Ombudsman Service for any complaints that arise
- If you complain to a Buy Now, Pay Later provider and this does not fix things, you will now be able to take your complaint to the Financial Ombudsman Service (FOS)
- They can look at your complaint independently and judge if you have been treated fairly. This should make it easier to get a refund if you are entitled to one
- Complaints can only be taken to the Financial Ombudsman for BNPL items purchased on or after 15 July 2026
- For more information on making a complaint, read our guide to making a complaint about a creditor
Unsure how the changes to Buy Now, Pay Later will affect you? Read our answers to the questions people ask us.
There are three types of Buy Now, Pay Later product.
- Buy Now, Pay Later (Deferred Payment Credit, also known as DPC)
- Fixed sum loans
- Short term interest free credit
The most common type of BNPL today is the first one of these. Follow the links above to find out more about the others.
BNPL is offered through many providers including:
- Klarna
- Clearpay
- PayPal
- Amazon
These services let you spread payments over a few months.
DPC usually lets you pay back over 12 months, but some more common options mean you pay back over 3 or 4 months (Often promoted as ‘pay in 3’ or ‘pay in 4’).
This means you have to make payments in a set amount of time. If you do not make payments or pay off the full amount during this time, you will be charged interest and extra fees.
This type of credit agreement is different from fixed sum loans and short term interest free credit