Things to Know About “Buy Now, Pay Later” Arrangements

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As soon as we hear the terms “buy now, pay later”, our immediate thought is “sign me up!” or “I’ll order five.” A very few of us will ask about “what are the terms and conditions?” since most of us will already be excited about a good that we would not have to have the money at the time of purchase.

Even with this seemingly easy way to purchase things that could be considered as luxury instead of necessity, we should be included in those few who would inquire first about the terms, rather than just jumping on the chance because these lifesaver schemes would still definitely affect our finances even if we are paying by our own terms.

You would still pay for your purchases

With the delayed billing, it is easy for us to forget about the necessities or luxuries we have bought that we could not afford to pay for at the time of purchase. This is one of the pitfalls of this scheme, we would often have this laidback feeling that we could afford it since we would be paying for the item in instalment.

Once we see that other items, we have been eyeing for a long time became available with a buy now, pay later scheme, we tend to avail of it even if we already have an existing scheme. In the end, we feel overwhelmed once the bills start arriving. We might even end up having a lot of items to pay for that we could not really afford even if we pay for it in portion.

It’s different from lay-bys

Buy now, pay later schemes are different from lay-bys but they are same in principle; you could purchase an item and pay for it in instalment. The only major difference is that with lay-bys, you could only receive the item once you have paid for it fully which is a positive thing because it keeps you motivated to not miss on your agreement with the seller.

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You are excited to make your weekly or monthly payment until the day that you have paid for the purchase completely and you could bring it home to enjoy. This kind of set-up is widely recognized in several countries. For schemes that involve laybuy Australia regulates this to both protect the rights of the buyers and the sellers.

It will affect your credit scores

With buy now, pay later schemes or even with lay-bys, missing a payment will definitely affect your credit scores. If your credit score is low, you might not even be eligible for any of these schemes because it shows that you do not have the ability to pay for what you owe. When it comes to financial matters like this, you have to be responsible and always consider how your purchases and debts would affect your credit score.

Buy now, pay later and lay-bys schemes are actually a consumer’s lifeline as long as they are responsible and committed to making the payment when it is due. It is also good practice to only have one ongoing payment scheme and just avail of another when you have fully paid for the previous.