it was about £3,000. unlike banks or credit card companies, buy now pay later firms don t have to check their customers full credit histories. at the moment, a lot of them make what are so called soft| credit checks, but they don t generally record data - with credit reference agencies. and what that means, in turn, is the money that you borrowl through buy now, pay later. can t be seen either by other buy now, pay later providers or by the mainstream creditl market so you can have people being lent money they simply. can t afford to repay. i decided to put some of the buy now pay later companies to the test. so, i already use klarna. so, i m going to sign up for a few other ones and see how easy it is to get credit with them and what kind of things they ask for when you sign up. it s asked for my name, my date of birth, and my address. ok, so i ve signed up to five different buy now pay later
type of credit can add to people s existing debt burden. when we looked at data from one major bank, and we looked at their customers who took buy now, pay later, one in ten of those customers were already in arrears when they took on a buy now pay later loan. and that for us is really good evidence that at the moment, that proper affordability isn t being checked at this point in the market. instead of at that point - knuckling down, paying off, you know, my debt and kind of sorting myself out - i essentially turned to buy now pay later services instead. when i started first using klarna, it was out of necessity because of the fact that i didn t have the credit card available to me because at the time it was maxed out. so, pretty much, when i started using buy now pay later services, i already had credit card debt. i had about £1,500 on one credit card, another for 500, and an overdraft for 1,000. so, all in,
solely, with those kind of prices. it would have been very hard for me to do it. instead of paying the full cost up front, it s typically broken down into weekly or monthly repayments. it s interest free credit with no fees, providing mike pays his instalments on time. you can pay, like, £10 this week, and then £10 the next week. it s less of a shock to the system than, i don t know, going to a shop and buying something, and then the total being £100 and something quid. that s what makes you want to use it more. i think it s like the psychology of it. it s not a big sum. when it s like staggered, and it s like smaller payments, small amounts, itjust means that, like, you re not having that feeling of, like, i shouldn t have bought that. most buy now, pay later companies advertise on social media. iona bain is a personal finance expert. these firms are actively targeting the younger market. they are actively trying to normalise
that puts you onto a very slippery slope where you then think that credit is the way to extend your spending. itjust felt like it was a really easy option. we would just go online, buy something and, you know, get that free serotonin from it. i like, probably half of my wages go on spending clothes and buying clothes. i was literally buying things because i was bored, i was buying things when i was sad. global data company equifax has analysed the buy now, pay later market. it looked at the spending records of more than 90,000 people and found that nearly 30% of all 20 to 30 year olds in the uk are using buy now, pay later. because the service was always available, i would buy things even if it was. i had no money left. in terms of, like, my relationship. with buy now, - pay later services, i think it probably is a little
says making money from retail sales means they don t have to charge their customers interest. i think it s really important to say that buy now, pay later- is by no means all bad. i ve personally used buy now, pay later products, as i thinkl the banks have had it good for a long time. overdraft fees, expensive interest and so on. so, i think it s refreshing that we ve got some innovation in the market. i think for me, itjust comes back to the question of i where s the protection - and where is the counterbalance to make sure that young people, whose first interaction with credit, will undoubtedly- be buy now, pay later, to make sure that there is sufficient protection i and information for them i to make the right decision? when these buy now, pay later products first hit the uk credit market in 2014, they were an instant hit with fast fashion retailers. now, around half of all major online stores offer buy now, pay later.