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What is a buy now, pay later scheme?

Buy now, pay later (BNPL) schemes are offered to customers at the point of purchase to allow them to spread the cost of what they are buying. Some retailers offer these services in-house and other use external companies who specialise in this.

When choosing BNPL, buyers are encouraged to make purchases and pay for their goods at a later date – this could be in instalments over the course of a month, or up to 30 days after the purchase is made. The payments could be staggered over several months or even years for larger purchases, like white goods for example.


What do people think about buy now, pay later schemes?

PayPlan recently surveyed over 1,000 18-34 year olds on the subject. More than 70% said they had used a BNPL plan to make purchases. Further to this, 73% said that buy now, pay later schemes contributed towards a debt problem later on.

This way of making purchases is intended to go easier on the budget, but buyers can be faced with charges if they miss their repayment deadline. If consumers use this form of payment method regularly, it can become easy to get bogged down with deadlines and end up missing some payments; it may be easy to get confused when making multiple purchases using this method.


How does social media have an impact on spending?

Retailers and companies offering BNPL schemes are almost always present on social channels and have an influence on consumer’s buying habits through organic and targeted social media advertising.

PayPlan’s survey highlighted the role that social media has on such purchases. 59% said their lifestyle choices have in some way been influenced by online influencers and 30% said they overspent due to advertisements on social media.

Given that the average person spends 2 hours and 23 minutes on social media a day, it can be argued that people are exposed to adverts and offers on a regular basis. Therefore, customers may come across BNPL schemes more frequently, if deciding to act on these offers.


What is PayPlan’s stance on buy now, pay later schemes?

PayPlan CEO, Rachel Duffey, had her say on BNPL schemes:

“It’s clear from our recent findings that buy now, pay later schemes are causing a significant proportion of buyers to mismanage their spending and, as a result, get into financial difficulties.

“Although these schemes are convenient in the short-term, they can have a negative lasting effect. If used frequently, it can be easy for buyers to lose track of repayment deadlines, resulting in late charges and fines.

“If you are struggling with debt, you should try to negotiate with your existing creditors and come to an arrangement over what you owe; you can ask for more time to pay and, although this isn’t guaranteed, it’s certainly worth asking the question.

“It may also be worth seeking professional help from a debt adviser if you are overwhelmed with multiple debts.”

Of course, there are people who will champion the buy now, pay later schemes. They offer an ease of accessing products without the need to pay for it upfront.


Get help today

If you have overspent as a result of BNPL schemes, or anything else for that matter, we are here to help. Get free debt advice and help today online or over the phone.

Talk to a PayPlan adviser for free on 0800 316 1833 .