[How does buy now pay later work?](https://www.experian.co.uk/consumer/help-discover/discover/guides/buy-now-pay-later.html#:~:text=What is buy now pay,to up to 12 months.)
Buy now pay later schemes do exactly what they say – you get the opportunity to buy something without having to pay for it until a later date. Also known as point of sale credit, some schemes give you 30 days to pay while others allow you to up to 12 months.
In general, if you repay the price of what you bought within the delay period you won’t pay any interest. That’s because these periods are usually interest-free.
If you use buy now pay later sensibly and make your repayments on time, it could improve your score. This is because when you use credit responsibly it shows lenders you are a reliable borrower. But if you fall behind with your agreed payments, this will be noted on your credit report for at least six years. This could lower your credit score and could affect any future application you make for a loan, credit card or mortgage. For more on buy now pay later and credit scores, please see our more detailed guide.
Buy Now, Pay Later (BNPL) is a type of short-term financing that allows consumers to make purchases and pay for them at a future date, often interest-free. Also referred to as "point of sale installment loans," BNPL arrangements are becoming an increasingly popular payment option, especially when shopping online. DATA
Buy now, pay later programs aren't all exactly the same. Each company has its own terms and conditions, but generally, point of sale installment loans operate along the following lines:
Although they both involve delayed payments, BNPL is different from making a purchase with a credit card. When you use a credit card to pay for things, you're only required to make the minimum payment due on the card each month. Interest accrues on the remaining amount (unless you've used a card with a 0% introductory APR) until you pay it off in full. But you can carry a balance indefinitely. In contrast, BNPL arrangements often don't charge interest or fees. But they have a fixed repayment schedule—generally several weeks or months. You're told upfront what you'll need to pay each time, and it's usually the same amount. It's comparable to any other sort of unsecured personal or consumer loan. Not all purchases may be eligible for buy now, pay later financing. And there may be limits on the amount you can finance this way. But buy now, pay later can be an attractive way to pay for smaller purchases when shopping online, and its popularity grew during 2020, with the rise of e-commerce in general.