Buy now pay later: what if I cannot pay later?

Important things to know about BNPL

1. It is a form of credit

The BNPL company gives you the money to buy what you want and then you pay them back in instalments. This is called “credit”.

Taking out credit is a contract, which means you agree to do certain things in return, like make your payments on time.

It also means that the people giving you credit can take action against you if you do not do what you agreed.

2. You have to pay it back

Using BNPL means you agree to pay back:

• The full cost of whatever you buy, and
• Any charges for late or missed payments

Some BNPL companies also charge interest or service fees.

Make sure you carefully check the terms of your agreement.

3. It can put you in debt

Missing payments or falling behind puts you in debt to the BNPL company.

That means they can:

• Add fees, which increases how much you owe them and makes it harder to pay back
• Start debt collection action, which can lead to court action or even bailiffs

Always keep track of:

• What you borrow
• What you spend
• What you owe

Find out how we can help if you are struggling to pay what you owe.

4. It can affect your credit file

Some BNPL lenders do hard credit checks, usually for anything you pay back for more than 12 months.

Hard credit checks are marked on your credit file. This can impact your credit score.

Any time you fall behind is also marked on your credit file.

Missed or late payments can make it harder to get credit in future.

5. Most BNPL is not regulated

The Financial Conduct Authority regulates anything you pay back for longer than 12 months.

That means it does not regulate:

• Things you pay back in less that 12 months
• Most BNPL you see at checkout

This means you are not protected like you are with a credit card or personal loan.

There are no affordability checks.

• These checks make sure you can actually pay them back
• It is easier to spend too much and fall into debt without them

“Section 75 protection” is missing.

This means could lose money spent on purchases over £100 if:

• The item arrives broken or
• Never arrives at all

You cannot complain to the Financial Obudsman.

BNPL is not covered by the Consumer Credit Act, so there is no way to escalate a complaint if they treat you badly.

Can I avoid using Buy Now Pay Later?

BNPL can seem like an easy way to buy what you need, but you do have other options.

1. Make a budget

A budget can help you put money away every month for unexpected or one-off costs like:

• Emergencies
• Christmas
• Birthdays

This stops you needing to use BNPL.

2. Plan ahead

Save in advance for takeaways, gifts or events.

• Research what you might need to spend on these, and
• Make sure you can still cover your essentials

3. Get creative

• Can you buy what you need second hand?
• Can you mend your clothes instead of buying new ones?
• Could you make birthday gifts for friends?

Read our tips for ways to save money and increase your income.

4. Explore other types of credit

Look at getting a 0% credit card or 0% overdraft.

These require credit checks, but:

• They give you more protections
• You have longer to pay the debt back

What is a fixed sum loan?

This is a type of personal loan.

You borrow a sum of money for an agreed amount of time.

You pay:

• The amount you owe plus interest
• Over 12 months or 12 instalments or longer

It is often offered like regular BNPL at checkout, but:

• It is a regulated loan
• The lender does a "hard credit check"

You often see this for big items like a new phone or boiler.

In these cases:

• You set up or install the new phone/boiler
• You pay for it in monthly instalments
• It takes over a year to pay
• Interest is added

A large number of hard credit checks can affect your credit history.

What is short term interest free credit?

This is a more traditional form of credit.

1. You make monthly instalments over a set term
2. You do not pay interest if you pay on time

It is often offered in-store.

• It is unregulated
• Lenders do a "soft credit search"
• You repay it in less than 12 months

Is a short term loan right for you?

Short term loans can be an easy way to get money fast. But:

• They are expensive
• They can leave you worse off

Types of short term loans include:

• Buy now pay later
• Payday loans
• Doorstep loans

Make sure you:

• Check you can afford the full amount – including interest
• Think about what happens if you cannot pay at some point

Cheaper ways to borrow include:

• Arranged overdrafts
• Credit unions

Do you need emergency help with money?

 

• Try contacting a trust fund
• Talk to your local council

I cannot afford my buy now pay later payment

Contact the people you owe to find out how they can help.

Buy now, pay later help and debt advice

Are you struggling to pay back BNPL?

It may be a sign you need debt help. Find out how we can help you.