What is Buy Now Pay Later?

When you’re offered Buy Now Pay Later (BNPL) at the checkout, this is a credit agreement – a form of borrowing.

Some retailers have their own BNPL scheme, but usually it’s run by a third-party provider.  If you keep to your repayment plan, you won’t usually pay interest or charges. 

If you’re offered BNPL, you’re likely to be able to choose between two repayment options:

• Paying in several equal payments. You pay off the cost of the item regularly, usually fortnightly or monthly, or over a few weeks or months.
• Paying the full amount in one go after a fixed period. You get a set interest-free period and only pay on an agreed date if you decide to keep the items. This can be useful if you want to try an item before you buy as you can return the goods without paying for them if they’re not right.

BNPL can be a useful way to spread the cost of purchases if you use it carefully and can afford the repayments.  As with any type of borrowing, there are risks you need to be aware of – especially as BNPL isn’t regulated in the same way as other consumer credit products and not subject to the same warnings. This is set to change with new legislation coming in by 2026 to give consumers greater protection. 

Here’s what you need to know before using it:

Some retailers encourage people to choose BNPL over other ways of paying by making it the default payment option or offering an incentive, such as a discount or free delivery.

But it’s important to give yourself enough time to think about how you’ll repay, and decide if BNPL works for you.

It’s important to understand what you’re signing up for by checking the terms and conditions, as most providers take a different approach to charges and late fees. Some even charge if you repay what you owe early.

Having lots of BNPL agreements of small amounts can start to build up. As well as checking you can afford all repayments on top of any other bills, make sure you keep track of when every payment is due.

As most BNPL products aren’t yet regulated, many providers usually only carry out minimal affordability checks – relying on (‘soft’) credit checks before they approve you. As a result, they won’t know whether you can afford to repay what you owe.

MoneySavingExpert lists which credit reference agencies BNPL providers report toOpens in a new window More BNPL regulations are set to be introduced by early 2026.

BNPL agreements that last fewer than 12 months aren’t regulated by the Financial Conduct Authority (FCA). This means you don’t get full consumer protection if something goes wrong or you feel you haven’t been treated fairly. This is expected to change with BNPL companies coming under the supervision of the FCA by 2026. 

However, if the complaint is with the retailer rather than the BNPL provider, you do have protection and can make a complaint at Citizens AdviceOpens in a new window

Some BNPL providers offer in-house dispute resolution services, but they won’t be impartial and the service and response you get will vary.

If you pay for something that costs over £100 (so an item that costs exactly £100 would not be covered) and up to £30,000 (not £30,000.01) by credit card and there’s a problem, for example an item is damaged or broken, you can make a complaint to your lender and ask for a refund under section 75.

However, even if you use a credit card to make a BNPL payment, you’re not covered under section 75. This is because the payment is made by the BNPL provider to the retailer. Be aware of this if a BNPL provider offers the option for you to pay using the credit card you have stored with them – if you agree, you’ll lose section 75 protection.

Before you buy anything, check what buyer protection your BNPL provider offers. For example, some providers will pause payments until the issue is resolved and refund any payments you’ve already made if the dispute is settled in your favour. However, be aware these are policies rather than legal rights.

Some BNPL lenders make a ‘hard’ credit check every time you spread payments over a long period. These checks will appear on your credit record and can affect your credit score. Missing a deadline for a payment will also damage your credit score.

Even if your BNPL purchases don’t appear on your credit report, you might be asked about your BNPL agreements when a new provider does an affordability check. Having more than one BNPL agreement might mean you’re not able to get other types of credit, such as personal loans and goods on hire purchase.

Keeping a record of how much you’ve spent and when your payments are due is vital to avoid extra charges on BNPL agreements, especially if you’ve got more than one.

Some BNPL providers offer you access to your account via their website or an app to help you keep track.

When using BNPL, there are a few things you can do to help make sure you don’t pay more than you need to:

• Look out for notifications from your provider telling you when your next payment is due.
• Make sure you’re able to make payments when they’re due. For example, if you had an unexpected expense, would it make you miss a payment?
• Avoid using BNPL if you’re already in problem debt and get help as soon as you can from a free, impartial debt adviser.
• Set up a Direct Debit or use your debit card to make repayments. Making repayments with a credit card means that you still owe money to the card provider.

Paying in instalments or delaying when you have to pay for your purchase can feel like a good way to manage your money, especially if you need to buy essentials. However, if you’re struggling to keep up with payments, try to avoid using them until you’re back on track.  

The more often you use instalments or delayed payments, the more likely they are to appear on your credit file. This could have a negative impact on your credit rating.  

Ask yourself if you would buy the item if it weren’t offered to you in this way. In other words, do you really need it?

If you’re worried about money, and you haven’t done so already, look at what you’re spending and what income you have coming in to see if you can cut back on costs.

If you don’t keep up with your repayments, you can be charged a penalty fee or interest (or both) depending on what kind of BNPL contract you’re on. Make sure you know what the charges are if you miss a payment, as penalties vary between providers. 

If it’s likely you’ll miss a payment, it’s important you talk to your provider before the payment is due. Missing a payment will negatively affect your credit score and could affect your ability to get credit in the future. 

By talking to your provider, they could offer help including:  

• working with you to provide support before you miss any payments. 
• working out an alternative repayment plan to help make payments more manageable  
• giving you enough time to repay and not pressurising you into repaying your debt within an unreasonably short time. 
• making sure your balance doesn’t get out of control once a repayment arrangement is in place. 
• recognising and responding to your needs if you’re in vulnerable circumstances.

If you miss a payment and don’t get in touch with your provider, they will usually follow this process:  

1. They might first ask you to get in touch by writing to you or calling. 
2. If you don’t deal with the debt, the loan will ‘default’ (in other words, you have failed to make payments).  
3. When the loan has ‘defaulted’, charges and interest could be added – increasing what you owe. 
4. If you still haven’t responded, your lender might go to court to seek a County Court Judgment (CCJ). In Scotland this is called a decree. A CCJ gives your lender more options to enforce repayment of the debt. These measures can seriously affect your ability to get credit with other lenders in future. 
5. The debt may be sold on to a debt-collection agency who will contact you and ask for payment. However, they are not allowed to remove goods. If you have not paid the debt after a County Court Judgement (CCJ) has been issued, the lender can apply for a warrant of control and instruct enforcement agents (also known as bailiffs). It is only at this stage that some goods can be taken and sold to pay towards the debt. 

Buy Now Pay Later is just one way to borrow money.