I’m on a debt solution. Can I use buy now, pay later?
When you’re on a debt solution, it’s usually against the guidelines to take out additional credit while paying off the debts that you already have. As BNPL is a type of credit, you shouldn’t use this while you’re in a debt solution.
If you’re on a debt management plan (DMP) or a token payment plan (TPP), and you’re considering using BNPL, please get in touch with your plan provider. They’ll need to understand what you need the credit for, and what alternative options are available.
If you’re on an individual voluntary arrangement (IVA), you must speak with your IVA provider before taking out any form of credit, including BNPL. Taking it out before getting consent off your Insolvency Practitioner would be considered a breach of your IVA, which could cause it to fail.
There’s usually a section in your budget for sundries and emergencies. In this section, you can set money aside each month to cover household appliances, should you need to replace one in an emergency. There are also several UK charities that sell near new and refurbished appliances for much cheaper than what you’d find on the high street.
Your plan provider knows that you have expenses such as Christmas and birthdays to cover each year. Depending on your situation, they’ll do their best to help you prepare for these expenses in advance. Using a realistic budget, reviewing it regularly and looking for ways to save money and increase your income can really help.
Buy now, pay later and your credit file
It’s important to be aware that like any financial service, using BNPL can affect your credit score.
Certain BNPL lenders make a ‘hard’ credit check every time you spread payments over a long period.
These checks will appear on your record and a large number of hard credit checks can affect your credit score.
Failing to make a payment on time will also have a negative impact on your credit score.