Buy Now, Pay Later: What’s Best for Me?

Personal Finance

Team MONEYME|15 June 2021| 3-minute read

‘Buy now, pay later’ has been becoming an increasingly popular way of shopping in both retail stores and online. Unlike layby where you don’t get to keep your purchase until you have fully paid the product off, by using buy now, pay later services in Australia you can own your purchase straightway without having to pay the full amount upfront.

There are now many different providers offering this service including Afterpay, Zip Pay and more so can choose the best pay later service for you.

But really, is it the right choice? Let’s take a look at some of the benefits and pitfalls of using buy now, pay later services in Australia and what alternatives are available.

Advantages of buy now, pay later

Using buy now, pay later can make the purchase process quick, easy and hassle-free, and it is available for in-store as well as online shopping.

Fast approval process: One of the advantages of using the buy now, pay later option is that the approval process is quick and easy, and there are minimal credit checks. There is no lengthy approval process that you often need to go through to get other types of loans. Plus, the buy now pay later apps make the process of setting up an account easy.

Automatic instalment payments: It is simple to set up your account and the automatic instalment payments mean you don’t have to remember to pay your bill each month. Being able to spread out the payments makes the purchase more manageable.

Benefits for retailers: As well as benefiting consumers, buy now pay later also provided benefits for retailers. Although retailers pay a fee for offering buy now, pay later, it attracts customers, and they get paid upfront as the credit provider they have partnered with are responsible for collecting the payments.

Disadvantages of buy now, pay later

Although minimal credit checks mean the application process is simpler, it can also mean you are more likely to get into more debt than you can afford to pay back.

Impulse spending: If you are already prone to impulse shopping and unnecessary spending, buy now pay later schemes make it easy to buy things you don’t need or can’t afford. It can also make it harder to keep track of how much you’re spending, especially if you have several items that you have bought using buy now pay later services.

Can’t choose your payment date: Because you can’t pick your payment schedule, the repayment dates might not fit in with when you get your paycheck or have other money coming into your account.

Late fees: Although buy now, pay later schemes often can be interest-free, there can sometimes be an establishment fee when you first set up the account. There can also be other costs and fees that can quickly add up including monthly account keeping fees and payment processing fees that are added to each repayment.

You can also be stung by late payment fees if you don’t make your repayments on time, so it can become very expensive over time, especially if you are a frequent late payer. Your bank may also charge overdrawn fees or interest if you are paying by credit card.

Afterpay Alternatives in Australia

Of course, one alternative to buy now, pay later schemes is save up your money and wait until you have enough cash upfront to pay for your purchase before buying it. But in today’s instant world, once a decision has been made to buy something, people often want to own the item as soon as possible!   

Another alternative to buy now, pay later services is to use a credit card. These days, there are more and more credit cards options to choose from. For example, MoneyMe’s Freestyle virtual Mastercard® works like a credit card and is stored digitally in your phone, instead of your wallet. This credit card can be used to purchase interest-free for up to 55 days and can be used instore with Tap n Pay or online. And, you can even use the Freestyle Mastercard® to transfer money to your account or pay anyone, just with a few simple taps on your smartphone.

If you are making a bigger purchase such as a car, you could also consider taking out loans such as a personal loan. MoneyMe offer low rate personal loans from a minimum of $2,100 up to $50,000. With MoneyMe’s instant loans, the money can often be in your account on the same day as you applied for the loan. Contact Australian online money lender MoneyMe today for more information out more about their cash loans and credit cards.