If your income has dropped and you’re worried it won’t go back to normal, find out what you can do to reduce the risk of falling behind on your buy now pay later payments.

What to do first if you’re worried you won’t be able to afford your buy now pay later repayments

Most schemes will charge a late payment fee and/or interest depending on what kind of buy now pay later contract you’re on.  Missing a payment will negatively impact your credit score and could affect your ability to get credit in the future.

Some schemes will also ask you to pay anything you still owe in one go.  So if you’re going to struggle, it’s important you talk to your provider before you miss a payment. 

They could offer help including: 

• Working with you to provide support before you miss any payments.
• Being flexible and use a full range of options to help ease any stress and anxiety you might be going through because of money problems .
• Put in place affordable and sustainable repayment arrangements. 
• Take account of your wider financial situation including debts with other lenders and essential living expenses you might have. 
• Give you enough time to repay and not pressurise you into repaying your debt within an unreasonably short time . 
• Make sure your balance doesn’t escalate out of control once a repayment arrangement is in place. 
• Recognise and respond to your needs if you’re vulnerable. 

If you don’t contact your lender, buy now pay later providers will usually follow this process.

1. They might first ask you to get in touch by writing to you or calling.
2. They’ll then issue you with a written ‘default notice’. This gives you an opportunity to arrange how to catch up with your missed payments.
3. If you don’t deal with the debt, the loan will ‘default’ (in other words, you have failed to make payments). This will usually be after two to three missed payments.
4. When the loan has ‘defaulted’,  charges could be added – increasing what you owe.
5. If you still haven’t responded to them, your lender might go to court to seek a County Court judgment (CCJ). This is called a decree in Scotland. 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.
6. 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 visit your property and remove goods. If you have not paid the debt after a County Court Judgement (CCJ) has been issued, the creditor 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.

Be careful how you use BNPL schemes 

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 them, the more likely they are to appear on your credit file and 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?