More than 2 million Australians are making use of buy now, pay later services through retailers online and in-store.
Of these users, one-in-six are in financial difficulty, resulting in total debt to the tune of $903 million.
With lenders scrutinising spending habits more than ever before, the use of this payment option can have a very real impact on any future loan application.
Many buy, now pay later providers don't check your ability to repay, or your credit history. This means you could end up with credit you can’t afford and have trouble repaying.
Delays all around
Last year, Westpac and its subsidiaries advised that borrowers must disclose any short-term buy now, pay later loans when applying for a home loan.
Your bank statements will show if you’re a regular user of buy now, pay later services and you may need to clear these debts before a loan is approved.
What you can do
Forward plan: Use buy now, pay later services as a last resort. Budget for your big spends and if you must use these services, consider any other bills or repayments first.
Don’t overcommit: Keep track of your payment commitments and make sure you make them. Try not to pay for these services on credit that may gain interest and more debt.
Get help: If you find that you’ve put too much on your buy now, pay later account, contact the provider immediately to discuss any hardship you are experiencing.
To learn more about how using buy now, pay later services could impact your mortgage application, contact your Liberty Adviser.