Buy now pay later is a purchasing scheme that allows consumers to obtain goods or services, either in-store or through online shopping, with flexible payment options — so they don’t have to pay the full price upfront. The consumer is able to take the item home on the day by making a small deposit. The remainder of the price is then paid off in scheduled interest-free payments over a fixed time period.
How much does Buy Now Pay Later cost?
It depends on the provider as to the fees and charges associated with Buy Now Pay Later. Many New Zealand providers offer interest-free, no-fee services based on the condition that the scheduled payments are made on time. If the buyer fails to pay on time, fees will be charged for the missed payments. While BNPL lenders do not charge interest, the late fees can range from $3 all the way up to $68 — so if you want to avoid fees, it’s important to make the interest-free instalments by the due date, because the late fees can quickly add up.
A monthly administration fee may apply with some lenders if an unpaid portion is carried into the next month.
It’s important to note that you could end up paying interest on your purchases indirectly if you have linked your credit card to your BNPL account. Ensure you pay your credit card balance in full to avoid interest charges sneaking up on your BNPL purchases.
How do I use Buy Now Pay Later?
At the checkout stage of a purchase, if a Buy Now Pay Later option is available, this will be visually or verbally made known to the purchaser. If you are unsure whether the retailer has the Buy Now Pay Later option, you can simply ask the individual retailer.
Signing up for BNPL is quick and easy. There is no hard credit check or extensive application process; you simply need to provide your contact details and identification. Once you’ve linked your credit or debit card, you’re ready to start shopping!
You don’t need to have good credit to use BNPL, so don’t stress if your report with the credit bureaus is less than perfect!
Various payment options
When viewing your BNPL dashboard via the app, you’ll be able to check how much you are able to borrow for your payment plans. Before making a purchase, you may undergo a soft credit check. Once this is out of the way, you may find various payment options available to you. The payment options will likely include interest-free instalments (either weekly or fortnightly), or monthly finance repayments — which come with interest charges like personal loans and short term loans.
How do Buy Now Pay Later repayments work?
The purchase price is spread across between four to ten, equal instalments.
You pay the first instalment at the time of purchase, and then you have up to 9 weeks (depending on the BNPL lender) to make each instalment.
Depending on the service provider, your repayments are due weekly or fortnightly.
Zero interest is charged on the repayments, and often, you won’t come across a fee unless you miss a payment.
The merchant covers the fees, so the purchaser doesn’t have to.
Compare Buy Now Pay Later Companies
You need to understand that BNPL is like a short term personal loan or credit card. Make sure you know what you're committing to when you sign up.