The likes of Klarna and Clearpay have become the new way to shop online. Known as point-of-sale loans, major online retailers are giving consumers the option to buy now and pay later on items.
The choice of spreading the cost over 3 months or paying up to 30 days later with promises of no interest and no fees ever! Really ever??
Recently these payment solutions companies have hit the headlines for growing concerns of people getting into debt with the ease of spending at the click of a button. New research suggests that OVER two million shoppers have damaged their credit scores using “buy now pay later schemes.”
I took a look at Klarna’s terms and conditions to see what it REALLY means when they advertise no interest and no fees.
Firstly, they state that the terms can differ between e-stores, and for the complete correct terms then the respective e-stores must be read. So, whilst you may use it for boohoo the terms may be different for I Saw It First, not exactly very clear for consumers.
Klarna advertises that there is no interest or fees ever, this is not true for overdue accounts, common sense may prevail on that one but for inexperienced teens it might not seem quite so obvious. This is also not true for all borrowing methods and the interest clause is quite confusing and unclear on when interest applies and when it does not. There is also a clause on minimum charges which is £1 per month?! Late payment fee is up to £12 per month and if you sign up to paper statements that’s another £1.49 per statement. Klarna also state that they may employ a debt collection agency to recover any outstanding debt and the reasonable costs incurred may be passed on. Klarna also are clear in the terms that legal action may be taken, it can affect your credit rating, they may make an application to have you declared bankrupt and order a sale on your property. This highlights the need to stay in control when using these types of lenders.
In conclusion,
- Make sure you are clear on repayment dates and avoid at all costs not making payments on time.
- Keep on top of how much you owe. It is quite easy to rack up a shopping basket on line and assume that you can just pay it on payday, forgetting about the other stuff you purchased a week before.
- If you are ‘trying before you are buying’ , make sure you send back the items you do not want. We have all done it, ordered something, never worn it and ‘go to the post office’ was on the to do list for too long.
- Be aware of that £30 top could end up costing you a hell of a lot more if you have misjudged how much you can afford to pay back