Who doesn’t love convenience? You could say it’s the most sort after global commodity. Quick finance has now joined the likes of Uber, online calendars, sleep tracking alarms, with buy now, pay later services. Buy now, pay later services such as Afterpay and zipPay have recently flooded the market and have attracted different people from far and wide. Essentially, buy now pay later services offer the handiest convenience; being able to pay for your impulsive buy without actually spending any of your money – right away. And the best part, no interest! It sounds amazing, doesn’t it? Yet, like all things in life, this miraculous, dream-delivering service can be overused. So, we’ve decided to look into these shiny new services and discover the dangers behind their glistening exterior.
The basics of buy now pay later services
Buy now pay later Australia has recently revolutionized the way we shop, particularly in the wardrobe department. Services like Afterpay and zipPay have spread across the physical and the digital shopping scape. It’s a service that allows any small rhetorical buy to become a reality.
Imagine: you see an eye-popping sale and you simply must take advantage of it (you’re basically saving money right?), then, you realise it ends before your next payday. You consider spending your grocery money on the desirable purchase, then you see that all-too-tempting sign; We accept Afterpay. It’s in that moment that you realise, anything is possible. You immediately make the purchase and you walk away radiating happiness. And that is buy now pay later services.
Much like a small loan, you begin to repay your buy now debt with four equal instalments, typically due every 2 weeks. Buy now pay later services have grown rapidly over the last the last 2 years, with Afterpay reining in 1.1 million customers over 8,600 retailers. Afterpay annual sales are suspected to surpass 1.5 billion as the big players hop on broad.
How do they work?
It’s simple really. To use buy now pay later services, the store has to partner with the service…and that’s it really. Of course, you also need to download the app and enter your bank account details, but that’s all! No need for a credit check, no application, no approvals – it’s convenience at its best. Shop now pay later services are available online or instore. So, convenience follows you wherever you go.
Once you’ve made a purchase, you typically repay the amount over four instalments every two weeks. There is no interest and no upfront fees.
Top retailers that offer buy now pay later services
Let’s be honest who needs another reason to blow their paycheck on a Kmart shopping spree? Well, buy now pay later services have certainly further tempted towards our favourite shopping realms:
- Big W
- David Jones
- Rebel Sports
- City Beach
- Lorna Jane
- Jetstar! (Yes, you can pay for holidays with buy now pay later!)
And the list could go on and on and on! Afterpay and zipPay have quickly altered the way we think about shopping. Now if you want to hit the shops, you can pay off your items gradually, rather then all at once.
Why we love buy now pay later
The rise of buy now pay later services have been swift, and they have reinvented the way we see our money and what we can buy with it. If you’re not yet convinced that buy now pay later services are as convenient as everyone claims, here are some reasons why people love them:
Avoid dipping into your savings
When you feel the impulsive shopping urge grow inside of you, but you don’t want to dip into the shallow pool that is your savings, that’s when people turn to buy now pay later. If your favourite retailer is having a sale, instead of paying the full amount upfront, you can enjoy your purchase, then pay it off slowly. So, instead of paying $100 dollars, you’re simply paying $25 every two weeks. Seems a lot less!
The physiology of spending has certainly contributed to the growth of services like Afterpay. In our mind, we feel like we’re paying less. You might not even notice that $25 creep out of your account every two weeks. So, it’s almost like you’ve never paid for it, right? This is where the hidden danger lies, but more on that later.
For the big purchases
In line with the physiology of spending, buy now pay later make larger purchases more feasible. It breaks them down into tiny, bite-size chunks that are easy to digest. And before you know, you’ve eaten all of them, without even realising it! You can use Afterpay to upgrade your couch, spruce up of your bathroom, or even take a quick getaway! When it comes to large purchases, buy now pay later remove the harsh sting and suddenly the purchase transforms into a cuddly puppy. Again, this can also be a danger, more on that later.
Easy online shopping
Online shopping has already etched itself into the convenience hall of fame and buy now pay later is simply the cherry on the cake. Most major online stores, such as the Iconic offer Afterpay, meaning you can be snuggling in bed ordering the latest addition to your wardrobe and not pay a thing!
Buy now pay later definitely speaks for itself. What could be better than scoring a new addition to your wardrobe or the latest gadget, without parting with your hard-earned dough immediately?
What to look out for
Unfortunately, like everything in this cruel, random universe, there are dangers to the glistering buy now pay later services. So, whether you’re a buy now pay later beginner or a professional user, then it’s time to get educated:
Here are some of the dangers of the Afterpay frenzy:
With buy now pay later services it’s easy to lose track of your spending. With Afterpay, a shopping spree turns from an expertise day out to seemingly free. During the course of your shopping, no funds will physically leave your account, so it’s easy to lose track.
And it’s important to keep in mind that you’re essentially taking out a loan with buy now pay later services. Owing credit is a responsibility that consumers cannot afford to take lightly. And buy now pay later services dress it up like it’s casual Friday. Speaking of Friday, ensure you’re ready for the Black Friday rush!
The elusive additional fees
Buy now pay late advise zero upfront charges, which is correct, however, if you’re ever late on a repayment, then you’ll see the charges rolling in. If you are late for a repayment Afterpay will charge you $10 fee, and if you missed the repayment again a further $7 fee will be charged. So, before purchasing an item on Afterpay consider other financial commitments and whether it suits your payment schedule for other expenses. Because it will cost you if you miss this bill.
Afterpay does take steps to protect their customers from easily falling into debt. For example, if a customer is late for a repayment, they are barred from making other purchases on Afterpay.
Refunds become fraught with complications
When you pay with buy now pay later services, refunds can be tricky. Firstly, the goods will be returned to the retailer. Then, the retailer must notify Afterpay and return a full refund to them. Finally, Afterpay will issue a refund to you.
It’s a long process that can be bogged down with paperwork and technicalities. So, when you’re purchasing an item through buy now pay later make sure you love it!
Effect on ability to apply for credit
This danger on your credit score is something that could affect your ability to apply for credit. And, trust us, we’ve seen it happen. Lenders see buy now pay later instalments as financial commitments that could bar you from being able to repay a quick loan. And if you pay you for buy now pay later services with a credit card, then, it will show up on your credit card as unpaid credit.
It can be easy to lose track of your buy now pay later spending. It can treat you to a nice dinner, but then, subsequently talk behind your back. Or it can be a two headed snake, or whatever other cliche metaphor you can think of. Point is, the dangers of buy now pay later can creep up and mess with your life in unforeseeable ways.
As a small alternative lending company, Nifty Loans believes in the necessity for responsible lending practices. And buy now pay later services don’t account for the responsibility of lending. With no credit checks and no approvals, anyone can essentially obtain credit through these services. Leaving consumers vulnerable to debts and uncommitted.
So, clearly there are many reasons to love buy now pay later services, but there are pitfalls to be wary of too. Before diving into the magical world of buy now pay later services, it’s wise to be equipped with the tools to thrive in that world! Remember to still show restraint and keep your budget in mind at all times.
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