Buy now pay later is music to most customer’s ears. It gives you the ability to have and own a product without worrying about paying until a later date when you’ve had an opportunity to save up enough money. This is becoming the trend for many online retailers and has become so much of a success for ASOS, they’re taking it global.
For many retail companies these come as 6 months, 9 months or 12-month payments without interest. However, in some cases, as the month’s tick by, interest can pile up depending on the cost of the product and how much is left to pay. This can come as a surprise to many customers, so we have created this guide to help you understand how these schemes work and how best to approach buying now and pay later so that you don’t fall into the trap of overpaying for your purchases.
Today, ASOS announced they’re taking their successful partnership with Klarna over to the USA. The ability to spread the cost of the clothes over multiple payments along with only paying for what customers keep is ideal for some of their customers. This is because most of their customers consist of Generation Z and Millennials who may not be able to afford their lavish spending habits immediately. These payment options allow them to keep up with the latest trends in fashion, whilst not feeling out of pocket.
Customers have around 30 days to pay for the items they keep and don’t have to pay for the ones they send back. This allows customers to ‘try before they buy’ rather than just admiring how it looks on a model. There is one drawback to this system, however, if you are late on a payment then you will be sent a late payment reminder and this may damage your credit score. So if you choose to go down this route, it;’s important to pay it back as soon as you can.
When shopping on Amazon, the range of products available is unmatched by any other online retailer, with products ranging from their roots of 1000’s of books to high-end electronics and furniture. If you’re wanting something bought and delivered fast, then Amazon is the place to go. After having a partnership with Hitachi Capital their Loan repayment system has been withdrawn as of May 2017. This has allowed Amazon to start their own buy now pay later scheme allowing customers with a credit card on their account to purchase items that can be paid over time.
These payments are expected in 5 equal instalments although the initial payment will be higher than the rest as this covers VAT and shipping costs. If you’re unable to pay these instalments, then Amazon will have the ability to block access to your Amazon account or terminate the account completely. If you don’t have a credit card on the system, Amazon has a huge range of credit cards available.
Very follows a simple structure with their Buy Now Pay Later scheme. In order to take part in this scheme, you’re required to set up a Very loan account. When first purchasing your items, you can choose either 9 months’ payback scheme for items over £50 or over 12 months for items over £300.
When under the 9 months scheme, a month is highlighted as a 28-day period whereas under the 12-month scheme it follows as the 12 calendar months. This is worth taking note as payments may come out unexpectedly if calculated wrong. Although you have these periods to pay back the full some you can either pay it in partial payments over this time or pay it in one lump sum before your payment period is over. If you fail to pay the full cash amount before the payment period is over then a lump sum of interest will be added onto the account for you to pay. This amount will increase every time you are unable to pay off the amount owed on your account every 28 days.
John Lewis has partnered with Hitachi Capital, the same company that was used by Amazon, this has given them the ability to create their buy now pay later scheme. With John Lewis, they only allow these schemes on specific ranges fn their higher-priced items, such as Electronics and Home. Electronics purchased on this scheme must be a minimum of £400 and payments can be spread over 12, 18 and 24 months. These payments come with 0% interest however a 10% deposit is required.
When it comes to home furniture you must spend at least £1,000 and up to £25,000, these payments can be spread over 1 year if you spend between £1,000 and £2,999 or over 2 years if you spend £3,000+ a 10% deposit is required for these products (a 20% deposit is needed for fitted bedrooms).
These buy now pay later schemes can be tricky to understand and can sometimes leave you spending more than you hoped. If you have had any issues with any of these companies understanding their schemes then don’t hesitate to call their customer services teams.