What are buy now pay later products?

Buy now pay later product is an agreement for you to purchase goods in the form of installment payment, this can be through regular installments without interest or after a period of interest-free.

Buy now pay later products are becoming a popular payment method at some street stores, but it is more commonly used by retail stores and online retailers. Their products are often aimed at young people and families.

If you've ever shopped online, you've probably seen the 'buy now pay later' option. While it can be tempting to delay paying for something you want to buy – and the advertising is often tempting – spending more than you can afford can be a steep path.

Providers of buy now pay later postpaid products include Klarna, Clearpay, Laybuy, and Movi. These companies offer a wide range of payment options. Some arrangements will allow you to pay after a certain period of time, while others will allow you to pay for your purchases in installments (sometimes called 'parts').

For example, Buy now pay later products can be useful by providing the opportunity to receive a discount when you do not have the cash available to pay there and then.

But remember, if you don't pay on time, you may have to pay fees or penalties. Any rights or protections you have will depend on the payment option you have selected.

That's why tracking:

• How much did you pay?
• How much do you still owe?
• Your repayment date
• How many different buy now pay later postpaid product deals do you have?

Why are buy now pay later products so popular?

 This type of financing has been around for many years. But recently, some companies have made it more popular with younger consumers. This is partly thanks to sizzling advertising campaigns featuring A-list celebrities from popular TV shows.

The ads sometimes target people on social media who may be less likely to buy the items.

It's not just buy now pay later vendors who do this - some online retailers, especially clothing retailers, do the same.

Buy now pay later products are easy to use, with a low minimum spending from only 2 million VND.

But it's easy to miss the big negative impact it can have on you in terms of piling up the money you owe and causing damage to your credit rating if you don't repay it on time.

What will you be charged?

Do you know?

Buy now pay later product providers can offer a wide range of products – some charge interest, while others do not. Interest-free products are not currently regulated by the FCA.

Exact fees will vary between providers and depend on the payment method you have chosen.

Not all services and payment options offered by these companies are regulated by the Financial Conduct Authority (FCA). This is because they do not charge interest.

This means that you may not be able to access the Financial Ombudsman Service (FOS) if you have a complaint about a service provided by a supplier of a buy now pay later postpaid product.

Installment

This is where your total purchase is divided into several segments - usually three or four. You usually pay one payment upfront and allow the provider to receive payment for the remainder of the installment afterwards.

If you miss any of these payments, you will incur expensive late fees. These fees will increase if you continue to miss payments.

Paying later

This is where you delay paying for your total purchase for a certain number of days - usually 14 or 30.

You won't have to provide payment details up front, but you will have to pass a soft credit check before your purchase is accepted.

When you need to pay, you'll usually get a prompt.

But don't miss a payment - because if you do, this debt can be turned over to debt collection agencies.

Financial payment

This is the most traditional form of buy now pay later.

You'll have to agree to a formal payment plan upfront, you may be charged interest, and you'll be checked for credit when you sign up.

Lenders should tell you before you take out a loan how much APR you will have to pay (annual percentage interest).

If you miss payments, you'll be charged - which can negatively affect your credit report.

Will buy now pay later products affect your credit score?

Signing up for most buy now pay later postpaid product deals using interest-free installments won't affect your credit rating. This is because they are usually only related to soft credit checks.

Any missed payments will be subject to a fee or penalty fee.

How to track your buy now pay later product transactions?

If you've made buy now pay later purchases, it's important to record how much you paid and when your payments are due.

You should also budget to make sure you have enough money to make each payment, or you could end up with expensive late fees.

What happens if you miss a payment?

If you have missed a payment, contact the lender to explain your situation. It's important to avoid withdrawing more credit unless you know you can afford to pay it back.

When to get debt advice?

Have you missed payments and can't come to an agreement with your lender? Then it's best to get advice as soon as possible, especially if you also have other debts.