Chat with a Financial Counsellor
Skip to main
The Salvation Army
Contact us

Buy now, pay later

Buy now pay later increases your impulse buying, making it easier to get in trouble.

Get informed now, avoid pain later

Have you ever worn something you haven’t paid for? Bought something using someone else’s money? Bought something you couldn’t afford?

If you’ve ever used AfterPay, Zip pay, rent-to buy, or a consumer lease, this is exactly what you’ve done. 1 in 6 of you are in financial strife when using these services.

It's likely that you:

Wouldn’t have bought the item...

if you had to pay cash (so said 64% of people using these products)

Were born in the 1980’s to early 2000’s

 (Millennials make up 75% of customers)

Are spending more...

when using “buy now pay later” (50% of people do)

Have an income...

of less than $40,000 per annum

It's likely that the lender:

  • Relies on your late fees to make up 20% of their profit
  • Has little idea if you can afford it or not
  • May not even be regulated

What is "buy now, pay later"?

So-called "buy now, pay later" (BNPL) services allow people to either delay the whole payment for their chosen item, or split the cost into equal instalments, sometimes interest-free. While they have been around for a while, their popularity has exploded in Australia over the past few years.

Why do they work? 

Buy now, think later: These services encourage an immediate purchase in the moment by moving you quickly and easily through the buying process so you don’t have much time to think.

FOMO factor: The need for instant gratification can cause you to make snap decisions because you don’t want to miss out.

Doesn’t feel like debt: These services are easier to access than credit cards and often don’t even feel like a debt at the time of purchase.

What's the problem with buy now, pay later?

You’re actually spending more.

This comparison chart shows that while BNPL promises just four interest-free payments, the actual total cost often stacks up much higher due to hidden sign-up fees, processing charges, account maintenance fees, and late penalties.
This comparison chart shows that while BNPL promises just four interest-free payments, the actual total cost often stacks up much higher due to hidden sign-up fees, processing charges, account maintenance fees, and late penalties.

Dangerous habits

These products encourage you to spend more than you can afford to pay now, using money that isn’t yours. 

Lack of regulation/protection

Providers can offer someone credit without checking to see if they can afford it. Also, if something goes wrong, you may have less avenues to get help or make a complaint.

Remember: You can’t guarantee your future income, so don’t take on unnessesary debt now.

Did you know...

These products can affect your ability to buy a house.

If you have trouble meeting the Afterpay payments and late fees appear on your account, this can affect your ability to borrow money.

As with other credit providers, if Afterpay chooses to report any negative activity (ie. late payments, missed payments or defaults) to credit reporting agencies, this may appear on your credit history, making it more difficult to get your home loan (or other credit product) approved.

Golden rules

  1. Don’t finance things like clothes, use cheaper options and pay cash.
  2. For big purchases: shop around and find alternative ways of paying (like a NILS loan).
  3. For everything else: can you go without until you save for it? If you think you can make loan repayments, start saving that amount of money this week.

Activity:

Think about a time you overspent.

  • What was happening?
  • What would you do differently next time?
  • How does this make you feel?