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The rapid rise of 'Buy now, pay later'


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At the end of your online shop, you may have noticed a new way to pay. So-called "buy now, pay later" services allow customers to either delay the whole bill for their chosen item, or split the cost into a clutch of equal instalments, interest-free.

Despite growing calls from debt charities about these products adding pressure to Britain's multi-billion pound debt pile, UK financial regulators have no plans to investigate them.

"This is an interest-free credit option, so for a consumer this is a way of buying the things they need," explains Mr Rohloff. " But Mr Rohloff does add that using "buy now, pay later" might encourage a consumer to spend more, saying: "The average order values are significantly higher." Which is why they are so popular with retailers. Like all such providers, Laybuy says it makes most of its money from the retailers themselves - about £4 in every £100 spent - and defends late fees as an "incentive to pay".

BBC

It sound too good to be true, but it's so easy to get carried away.

After buying cars on PCP, it looks like another ticking bomb. What could possibly go wrong if people addicted to debt add more to it?

Do you have any experience with this products?

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If there's something I am going to buy anyway I shop around for the best headline deal - but then if on the same deal they are offering interest free credit I'll take that too. But I emphasise it's only for something I would buy anyway.

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On 26/01/2020 at 11:16, Si1 said:

If there's something I am going to buy anyway I shop around for the best headline deal - but then if on the same deal they are offering interest free credit I'll take that too. But I emphasise it's only for something I would buy anyway.

Yeah. If you're moderately savvy financially, then it makes perfect sense to take advantage of interest free loans when they are available. The days of being able to negotiate cash discounts for many things seem to be over - everyone would rather push a credit deal on you - so if the credit is interest free over a few years you might as well take advantage of what is effectively a discount. We just did it with a sofa from DFS.

Edited by mattyboy1973
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16 hours ago, mattyboy1973 said:

Yeah. If you're moderately savvy financially, then it makes perfect sense to take advantage of interest free loans when they are available. The days of being able to negotiate cash discounts for many things seem to be over - everyone would rather push a credit deal on you - so if the credit is interest free over a few years you might as well take advantage of what is effectively a discount. We just did it with a sofa from DFS.

As you and @Si1say if your buying anyway makes sense just did it with some golf clubs

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16 hours ago, mattyboy1973 said:

Yeah. If you're moderately savvy financially, then it makes perfect sense to take advantage of interest free loans when they are available. The days of being able to negotiate cash discounts for many things seem to be over - everyone would rather push a credit deal on you - so if the credit is interest free over a few years you might as well take advantage of what is effectively a discount. We just did it with a sofa from DFS.

Should the sofa develop a fault over the period of the loan you have greater power to return It also under the credit consumer act.

This works particularly well for handing back a lemon car seeing as we dont Have the same rights as the US with dodgy cars.

I'm not for buying new i rather pay a bean for 2nd stuff in new condition but do use a 0% CC card when I book holidays I have had 2 years with no interest at all so far and will pass it on to another card at the end of the term for another two years or more. If that's the game you have to play so be it, to be fair though I did the same in the late 90's when all the debt peddling started I was savvy as a 18yo. Lol.

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8 minutes ago, Locke said:

How do you know that it hasn't -even a little bit- influenced your spending habits?

Very fair point. My wife is a sanity check stopping me buying sh1t to be fair ;)

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I agree virtually every transaction online I complete comes with the offer of short term credit. PayPal and amazon in particular pushing credit and credit cards, often with offers that don't even make them sound like credit. 

- £20 off your next order... Click on the link.... for taking an amazon credit card

- Spend £30 on PayPal bnpl to get £30 back (then in tiny writing... Only to the first 3000 customers) 

- £50 off a 100 spend at Very... Oh and we will open you a credit account even if you pay by card. 

No wonder debt restructuring orders are twice as high as they were just before the GFC. 

Edited by regprentice
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50 minutes ago, regprentice said:

I agree virtually every transaction online I complete comes with the offer of short term credit. PayPal and amazon in particular pushing credit and credit cards, often with offers that don't even make them sound like credit. 

- £20 off your next order... Click on the link.... for taking an amazon credit card

- Spend £30 on PayPal bnpl to get £30 back (then in tiny writing... Only to the first 3000 customers) 

- £50 off a 100 spend at Very... Oh and we will open you a credit account even if you pay by card. 

No wonder debt restructuring orders are twice as high as they were just before the GFC. 

with 'very' usually their stuff is £50 more expensive than the identical same branded items at Amazon - not always the case with tech though, can use offer this to get the odd bargain. And the very credit account, if you use the 3 equal 0% payments is handy, but if you default on one of those they sting you big time - so obviously built as a debt trap for the easily confused it's a bit wrong really.

Edited by Si1
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I'm probably wrong but I just always assume that any ''interest free'' credit offers just have an inflated asking price anyway and the same item can be bought for less for cash elsewhere.

But given that I'm an avid non-consumer of stuff I never really get the opportunity to put my theory in to practice though.

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26 minutes ago, nome said:

I'm probably wrong but I just always assume that any ''interest free'' credit offers just have an inflated asking price anyway and the same item can be bought for less for cash elsewhere.

But given that I'm an avid non-consumer of stuff I never really get the opportunity to put my theory in to practice though.

Good point, when so many are doing it now it is just another way to get us to part with our money, money we have not yet earned.?

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The cult of consumerism needs to push 'easy' money.  Am I old fashioned for living as 'never a borrower or lender be'?

Credit is a claim on future work, with Interest being the adjustment for the value of future work. 

The kicker is unless you use credit to build more value (by doing something productive), you take from tomorrow to feed today. Take it to the conclusion and you have indentured servitude and feudalism - guess who is OK with that outcome.

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1 minute ago, Locke said:

Interest is the time value of money. Work in the future is worth less than work now.

I work to manually plough a field and make a bushel of corn.  I borrow against future earnings to get a tractor. As a result I can plough deeper and get 10 bushels of corn.  

 

 

 

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1 hour ago, msi said:

I work to manually plough a field and make a bushel of corn.  I borrow against future earnings to get a tractor. As a result I can plough deeper and get 10 bushels of corn.  

Doesn't quite work the same way with a 65" lcd TV or a white audi a3 which is where most of this debt will have gone. 

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1 hour ago, msi said:

I work to manually plough a field and make a bushel of corn.  I borrow against future earnings to get a tractor. As a result I can plough deeper and get 10 bushels of corn.  

Ha. I understand the concept of return on investment.

If you had the cash now, you could make the investment now and would not pay the interest. Because you are selling future labour, you have to pay an extra amount of labour.

This is why negative interest is so perverse.

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1 minute ago, regprentice said:

Doesn't quite work the same way with a 65" lcd TV or a white audi a3 which is where most of this debt will have gone. 

You get the entertainment value sooner than you would have if you had to save up your labour.

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6 hours ago, nome said:

I'm probably wrong but I just always assume that any ''interest free'' credit offers just have an inflated asking price anyway and the same item can be bought for less for cash elsewhere.

But given that I'm an avid non-consumer of stuff I never really get the opportunity to put my theory in to practice though.

For some I think it's a 'loss leader' type offer to get people on the hook for more debt. 

I do recall my dad, who was a double glazing salesman, sitting at the kitchen table at night desperately trying to work 17% into his quotes to cover 'interest free' credit. People would imply they were paying cash, agree a price then ask for interest free at the last minute which, if the original quote had been done on interest free would have been 17% higher! 

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8 hours ago, nome said:

I'm probably wrong but I just always assume that any ''interest free'' credit offers just have an inflated asking price anyway and the same item can be bought for less for cash elsewhere.

I agree with this in principle, but it doesn't always seem to be the case any more. Its more that they are stiffing everyone who pays cash, so you might as well go for the credit.

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2 hours ago, regprentice said:

if the original quote had been done on interest free would have been 17% higher! 

I think it would be a lot more, particularly back in the day. Compound interest really is a snake in the grass.

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1 hour ago, mattyboy1973 said:

Its more that they are stiffing everyone who pays cash, so you might as well go for the credit.

Better just to pay with what you have. The only reason to take credit would be for credit card rewards, which are paltry these days.

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14 hours ago, mattyboy1973 said:

I agree with this in principle, but it doesn't always seem to be the case any more. Its more that they are stiffing everyone who pays cash, so you might as well go for the credit.

That's certainly the case with new cars... all sorts of discounts, incentives and dealer contributions for those taking out finance, zero discount for those paying cash.

I even read a recent thread on Pistonheads where a guy was saying the dealer effectively refused to sell him a car when he became aware he was wanting to pay up front in full and was only prepared to sell it on finance.

I suppose the answer in this case is to take it on finance with all the various reductions and incentives on offer... and then settle the finance in full almost immediately.

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1 hour ago, nome said:

That's certainly the case with new cars... all sorts of discounts, incentives and dealer contributions for those taking out finance, zero discount for those paying cash.

I even read a recent thread on Pistonheads where a guy was saying the dealer effectively refused to sell him a car when he became aware he was wanting to pay up front in full and was only prepared to sell it on finance.

I suppose the answer in this case is to take it on finance with all the various reductions and incentives on offer... and then settle the finance in full almost immediately.

loads of peps doing this with new EV's on the speakev forums. Take the £3.5k gov grant and dealer finance discounts on a PCP or finance loan the clear the loan after 1st months payment is settled.

 

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  • 415 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


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