28 June 2022
BNPL Blog
It can seem like the perfect solution when you’re needing that new outfit, or pair of shoes and money’s a little bit tight, get what you want now, and pay it off with no interest or charges, spreading out the cost. When you put it like that it does sound great, but it’s when you can’t make your repayments on time that things start to turn sour, with some lenders imposing late fees, which can begin to mount.
BNPL schemes are unregulated, and whilst that is set to change towards the end of this year or early 2023, it’s important to remain wary of tahe risks associated with this form of lending.
Over a third of those in the UK using BNPL schemes say that they can’t handle the payments, with their use of them leading them into debt. With the cost of living crisis making the proposition even more appealing to some customers, but as people turn more to the schemes it gets harder to track all their different repayments, and ensure they’re made on time. Some BNPL schemes also have hidden fees which can take customers unawares, for example when returning items.
So what’s the best way to avoid the pitfalls of buy now pay later? The most effective way is to not use them at all, but we understand that isn’t always the practical reality, particularly with the cost of living crisis. Whilst BNPL can be a great option for some things, it’s important for people to consider what they really need to use it for, as opposed to what they’d want to buy with it, this way you can avoid multiple payments stacking up.
Another alternative to BNPL would be to get an affordable loan with 1st Class Credit Union.
Our personal loans start from £100, at 19.6% APR. Borrowing £700 over 6 months would see you repaying £737.22, with the total cost of your credit £37.22