BE CAREFUL WITH ‘BUY-NOW-PAY-LATER’ THIS HOLIDAY SEASON

Reception • Nov 26, 2020

The use of buy-now-pay-later services is exploding – and causing some people financial harm.

 

The number of active buy-now-pay-later (BNPL) accounts increased 38% and transactions jumped 90% between the 2017-18 and 2018-19 financial years, according to a report from ASIC.

 

ASIC found that 21% of users who were surveyed had missed a payment in the previous 12 months.

 

Another negative impact is the red flags it can raise during a home loan application. Banks and lenders that see BNPL on your banking statements get nervous about your savings and spending habits.

 

Simply put, lenders might question your ability to budget and live within your means.

 

All BNPL providers are not looked at the same when you apply for a home loan. Some have higher risk associated with the way they lend money and it can lead to more difficulty with a home loan application.

 

If you’re going to use BNPL, treat it as a short-term loan that you pay back as quickly as possible.

Our advice would be to try and avoid using these accounts all together.

We always say ‘If you can’t afford to buy it in full, then you shouldn’t be buying it at all’.

Disclaimer: This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

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