Lots of consumers in the UK have used Buy Now Pay Later or BNPL to buy furniture. This can be tempting for many reasons. It can help you get the items you need to furnish your house without having to pay upfront and can be useful if you don’t have the savings to cover these items. However, there are drawbacks to using BNPL to purchase items of furniture too.
Here are the pros and cons attached to using Buy Now Pay Later to buy furniture.
What is BNPL?
Buy Now Pay Later is a type of credit that allows you to buy goods and pay for them later. Some companies give you the chance to get the items that you need and not pay anything towards them for up to a year or longer. Once you do need to pay for your goods, you’ll normally do this in instalments so you don’t need to pay a lump sum. You might not even need to pay any interest as long as you pay within the required timeframe.
Will BNPL agreements show up on my credit report?
One reason why Buy Now Pay Later became so popular in the UK was that it didn’t used to appear on people’s credit reports. However, this has now changed due to a change that came about in 2023. This is one reason why you do need to think carefully when you have the chance to enter into a BNPL agreement.
What are the benefits of BNPL to buy furniture?
BNPL can offer quite a few benefits to people who want to buy furniture and pay for it later. Even if you do have the funds available, the chance to avoid paying anything immediately can be appealing as you could use the money to tackle other debts and living expenses. It can also mean you still have cash available if you’re in a financial emergency.
Interest-free periods can also make buying furniture on credit appealing. They can make it easier for you to save money and can help you get the furniture you need before its price goes up. BNPL is also appealing to people who want to get furniture on credit because it can be more accessible than other types of borrowing.
Many people find they don’t have to go through tough approval processes to get this kind of credit compared to other forms of credit. BNPL tends to be more accessible to people who have bad credit and don’t have any or many other options. You won’t normally receive a penalty for making early repayments, and repayments can be flexible.
What are the disadvantages of using BNPL to buy furniture?
Some people say that BNPL can be addictive. Once you have started to buy furniture on credit, it can be all too easy to start purchasing other items this way, including ones that you don’t necessarily need. It can be easy to lose track of your debts once you have taken out lots of BNPL credit.
As it’s relatively easy to be accepted, you might get into a lot of debt before you know it if you start entering into a lot of these agreements. If you start finding it hard to keep up with repayments, you could be penalised for late payments. Once you leave an interest-free period, you might start to accrue various late fees and build up lots of interest.
What is the relationship between BNPL and my credit score?
Missed BNPL payments can hit your credit score hard. BNPL providers don’t always run hard checks, but you should never assume that they won’t do. A hard check can bring your credit score down by several points.
If lots of hard checks are run on you in a short period of time, this can have a substantial impact on your credit rating. Credit referencing bureaus are starting to take BNPL agreements more seriously. This is why you really need to avoid borrowing more than you can afford even if you’re only using BNPL as credit.
What to avoid when using BNPL to buy furniture
It’s really not a good idea to take BNPL less seriously than any other type of credit. Credit agencies are starting to treat BNPL in the same way as other forms of credit, and it’s very important to make your repayments on time. If you start using a BNPL too regularly, this could make it harder for you to get credit in future. This could make lenders think that you are over-reliant on credit and therefore treat you as high-risk borrower.
How can I buy furniture without using BNPL?
There might be other options available if you need to furnish your home but can’t or don’t want to use BNPL. You could try and get a credit card with an interest-free period or take out a loan. Peer-to-peer lending platforms can also be helpful, although the interest can be high. Loans can also come with a lot of risk and shouldn’t be taken out if you have worries about making the repayments.
Using BNPL can be very tempting when you need to buy furniture for your home and don’t have any other way of paying for it. You might be able to avoid interest if you can pay in full a few months down the line. It can be easier to get BNPL than other types of credit, and this is why it has become so popular with people who have low credit scores and have been turned down elsewhere. Remember, BNPL can still have a bad impact on your credit score, especially if you can’t stick to the terms and conditions.
Over the years, some people have had a more relaxed attitude to this form of borrowing as it didn’t tend to appear on their credit reports. Credit agencies and bureaus in the UK are starting to take BNPL more seriously, so it’s now important to treat it like you would treat any other type of credit. If you do decide to use BNPL to get furniture for your home, don’t take out more credit than you can afford and think really carefully before using it to purchase anything you don’t need.