Buy now pay later
Companies that offer small-value loans for the purchase of goods and services – which can be called “buy-now-pay-later” services but are also referred to as payday loans, cash advance loans, etc. – enable the purchaser to delay payment for 14 days or more. The cost of the service depends on how long the borrower wishes to delay payment and how the loan is repaid.
Some companies offer this service to their customers free of charge – for example, if the amount is below a specified maximum – but the cost of such deferred payment can also depend on the amount spent on the goods and services.
It is important to familiarise yourself with the cost of the service and what it will cost you if, for any reason, you cannot pay the debt when it falls due.
Using a “buy-now-pay-later” service can be an easy and convenient way to pay for goods and services; however, it is important not to undertake obligations that you cannot afford.
Why will you have money in 14 days if you don’t have it now?
How does this payment option work?
The service works like this: when you buy something, you are offered this buy-now-pay-later option when it comes time to pay. This type of service can be available to individuals when they pay at the cash register in a store, and also when they shop online. In most instances, you must have registered with an online service provider. If you are going to pay at a cash register in a store, you need to have installed an app in your smartphone.
Is it sensible to use this service?
- It is important to acquaint yourself thoroughly with the terms and conditions set by the service provider.
- This service is often advertised as being available to customers free of charge or at no interest. Costs can pile up, however, if you cannot pay at the agreed time.
- Advertisements for this service usually emphasise how simple it is to use.
Good advice
- Familiarise yourself thoroughly with the terms and conditions set by the service provider.
- Find out what the cost will be if you cannot pay on the agreed date. Find out whether you have to pay a so-called payment fee; such a fee can vary, depending on the amount you spend on the goods or services purchased.
- Note that the advertised interest rate may differ from the rate offered to you. Service providers offer different interest rates, depending on individuals’ credit scores. You can see your credit score in My Pages on the Creditinfo website.
How is my ability to pay determined?
- Service providers do not assess your ability to pay (also called your debt service capacity) and do not have access to information on your income or any other debts that are not overdue.
- A credit score is not the same thing as a credit assessment.
- Service providers determine whether you are on the default register by searching the Creditinfo website.
- Searches on Creditinfo affect your credit score.
If you decide to use a “buy-now-pay-later” service
- Make a plan: Be sure that you can pay the entire amount and that you can afford the monthly payments in addition to your other obligations.
- Take care not to lose sight of the big picture: Aim not to pay on several instalment agreements at the same time.
- Get help: If you see that you cannot handle the payments, seek assistance immediately.
Where can you turn if you end up in difficulties?
- Contact the service provider/lender and see what options they offer.
- The Office of the Debtors' Ombudsman can help you to gain an overview of your finances, give you good advice, and help you to negotiate with creditors – free of charge.