Legal Aid Queensland is encouraging shoppers to think carefully before using buy now pay later schemes over a credit card this Christmas and to make sure they’re aware of the pitfalls if they do.
Legal Aid Queensland consumer advocate and principal lawyer Paul Holmes said consumers must know their rights before entering a buy now pay later contract to reduce potential stress and financial pain later.
“Buy now pay later schemes are contracts where you borrow money from a company to buy goods or services and you walk away from the shop with your items immediately and then pay the borrowed money back regularly,” Mr Holmes said.
“We’ve been seeing an increasing trend over the years where Queenslanders are opting to use buy now pay later arrangements over a credit card because, unlike a credit card, you are not charged interest.
“But buy now pay later schemes come with a potential sting-in-the-tail—any late payments mean you’ll be charged a late fee.
“Some companies may also charge payment processing fees or monthly account fees and if something goes wrong, people have less legal protections with a buy now pay later contract than they do with a credit card or personal loan.
“If you are having trouble making the repayments, it’s still worth asking the company for help but buy now pay later schemes are not legally required to help you if you run into trouble.”
Mr Holmes said another reason people turn to buy now pay later services is because credit assessments don’t have to be done – something banks and other lenders will do.
“People may not realise that buy now pay later services can still list a non-payment as a default on someone’s credit report, he said. “While some companies have said they don’t default list people who don’t pay, default listing can be done.”
Mr Holmes said Queenslanders experiencing problems with a buy now pay later contract can get help by calling Legal Aid Queensland on 1300 65 11 88 or by calling a financial counsellor on 1800 007 007.
For more information about buy now pay later schemes visit Money Smart
Miranda Greer(3917 0407) or Caroline Page (3917 0406)