Credit, Collections & Insolvency News
In the UK, the average consumer owes of £176 per person to Buy Now Pay Later (BNPL) Schemes such as Klarna, Laybuy and Clearpay according to a new report by Money.co.uk
In a report titled ‘Shop Now Stress Later’ the report also suggests that as Influential organisations, such as Manchester City have begin to enter commercial relations with BNPL scheme providers, such as Laybuy, this debt is likely to continue to grow.
Virtual credit card Zilch tops the list £238.94 debt per shopper with Zilch users having low confidence in paying back what they owe on time. with only 18% thinking that they will be able to pay it back.
Almost half of BNPL users (46%) think that these Klarna-style schemes have no adverse affect on credit rating and 25% believe these schemes to have a positive impact on poor credit scores.
Salman Haqqi, Personal Finance expert at money.co.uk said“While Buy Now Pay Later schemes, like Zilch, Klarna and Clearpay, are quick and easy to join and seemingly harmless, they are in fact an entry point to debt for many.”
“Their quick and easy signup process, minimal credit check and youthful marketing appeal could be causing shoppers to sign up and spend more than they can afford without understanding the full risk.”
“When taking on any sort of debt, it is important that you understand the risks in full otherwise you could end up in a cycle of debt that you can’t get out of. Our recent study shows that those who use Buy Now Pay Later services tend to overspend or purchase more than they otherwise would, as they have the option of breaking the payment into smaller chunks.”
Here’s the breakdown of the average owed to BNPL scheme:
