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BUY NOW PAY LATER OR STRESS LATER?

Published on:December 23, 2020Author:Emma Hartley

Recent new figures from debt advice provider, Financial Wellness Group are showing an upward trend when it comes to younger people seeking Debt advice

  • 31% of new Debt Advice & Solution customers are now under 30 years old, this is up from 23% last year
  • 60% of new customers are single
  • 64% of new customers have no children
  • And 4 in 5 new enquiries are from customers either renting or living with family

Buy Now Pay Later (BNPL)

With many online retailers now accepting “Klarna” at their checkouts and using tag lines such as “Don’t wait until payday hon, Boohoo accepts Klarna”, the Buy Now Pay Later industry is booming, with Klarna themselves recently valued at $10.6bn (£7.8bn).

Klarna boasts itself on offering, short term fee and interest free lending as an alternative to credit cards with retailers themselves picking up the tab.

Klarna will usually offer buy now pay in 30 days time or split the costs over 3 equal payments, promising no interest, no fees, no late payment charges, no complicated sign up application process and no credit check appearing on the customer’s credit file.

With almost 10 million customers and 95,000 new accounts opening each week are they luring customers into unsustainable debt by tempting them to buy more than they can afford?

 With the average UK customer age of 33 and Klarna linked to major brands such as Pretty Little Thing, Asos, JD sports and many more with a young target audience – can this be encouraging reckless spending?

By Now – Can’t Pay Later?

Step Change Debt Charity has also reported an increased number of customers who have BNPL debts amongst their debts.

A report by the financial advice site Money.co.uk, “Shop now, stress later”, suggests that 18- to 24-year-olds on BNPL schemes such as Klarna, Clearpay, Zilch and Laybuy owe about £225 each.

However Financial Wellness Group have reported that whilst the average BNPL debt is relatively small some customers can have up to 10 individual BNPL Loans.

It is a concern the number of younger people finding themselves with serious debt problems are increasing, and it is often whilst they are still living at home. This is a least in part driven by the BNPL lenders who encourage customers to focus on instant gratification instead of the long term affordability. This is also reiterated by brands using social media platforms and influencers with large followings to encourage young people to buy what they see.

Is the worst still to come?

The pandemic has undoubtedly left many households in financial crisis, with a rise in unemployment and incomes reduced. However with many lenders providing payment holidays, it is likely that the full impact of indebtedness is still to come?

Who can you talk to about debt Issues?

Knowing you owe money that you cannot afford to repay can be very scary. The problem will not go away and will only get worse if you ignore the problem. Don’t panic, it’s important that you look after yourself and keep calm.

The Debt Advisor has been in existence for 21 years and we have gained a reputation as the “go to” practice for debt advice and debt solutions and most importantly, we are authorised and regulated by The Financial Conduct Authority “FCA”.

The FCA register  will let you know if the organisation has permission to provide debt advice and are able to help with debt adjusting which is the ability to negotiate with your creditors.

Get Debt Advice Today

For full debt advice and whether any of our available debt solutions would be the best option for you to get out of debt, you can speak to one of our advisors directly on 0800 085 1825 or arrange a callback.

The Debt Advisor Ltd is regulated by The Financial Conduct Authority. This means we are able to offer debt advice and deliver both formal and informal solutions. All debt solutions need to be carefully considered and you must take independent debt advice. We hope that the information and debt advice on this site including Frequently Asked Questions, will help inform you.

There are sources of free debt advice and services. You can find out more by contacting the Money Advice Service on 0800 138 7777 or by visiting their website.