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Buy now, pay later, also known as BNPL, is a type of borrowing. Buy now, pay later lets you make purchases without paying for them straight away. This could be offered by retailers at the point of sale in a store or an online checkout. With buy now, pay later, you are agreeing to make payments in instalments rather than paying the full cost all in one go.
Read more on buy now, pay later, including if buy now, pay later can affect your credit score.
Buy now, pay later financial products all work in a similar way.
Depending on which provider you’ve borrowed from, and the product offered, you’ll have to make repayments over a period of weeks or months.
The main appeal of buy now, pay later products is there’s usually an initial interest-free period where all you’ll pay is the price of your goods or service (plus a potential service charge or fee). Bear in mind that longer-term borrowing might incur interest or fees.
Before you make a purchase using buy now, pay later, make sure you understand the terms and conditions as well as how much it will cost. And don’t forget that buy now, pay later doesn’t make your purchase any cheaper, it just spreads the full cost over time and could end up being more expensive in total. It’s a good idea to make a note of when repayments are coming out so you can make sure your money is in the right account.
When used appropriately, buy now, pay later can be very convenient.
For example, if you’re buying a new item of clothing but aren’t sure which size will fit. You could order more than one size, and use buy now, pay later so you're not charged for everything at once. If you return the items you don’t want before the first payment, and provided the returns are accepted by the retailer, you won’t be charged for them.
It can also come in handy for larger purchases, as you can spread the cost rather than having to pay in one go. However, you need to be certain you can afford the repayments otherwise it could have serious consequences.
As buy now, pay later is a form of borrowing, falling behind on the repayments can have an effect on your finances. Any sudden change in your circumstances might impact your ability to repay the money.
You might want to look at alternatives to buy now, pay later. Think carefully about the following: