What if I have buy now pay later?

What is a buy now pay later loan?

A buy now pay later (also known as BNPL) loan allows you to buy consumer goods or services and pay by regular payments. 

When you buy consumer goods or services and pay with BNPL:

• the BNPL lender pays the shop for the goods or services, and 
• you repay the BNPL lender by regular payments (e.g. over six weeks). 

A key requirement of a BNPL loan is that it does not charge interest or credit fees (default fees are allowed), and no security interest is taken.

What rules must BNPL lenders follow?

From 2 September 2024, BNPL loans are consumer credit contracts under the CCCF Act.

This means that BNPL lenders must comply with all the rules in the CCCF Act applying to a lender. There are some exceptions which are set out at the bottom of this page.   

Your lender must:

• be responsible when dealing with you, including by acting with due care at all times    
• provide you with important information about your BNPL loan in writing before you sign up and when you change your credit limit. This information includes your credit limit, details of any fees payable, and contact details for the Dispute Resolution Scheme which the BNPL lender belongs to
• help you to understand what you are agreeing to before you sign-up or increase your credit limit (e.g. by answering any questions you have)
• treat you reasonably and in an ethical manner when problems arise (e.g. if you have missed a payment or are otherwise in financial difficulty)
• provide you with information about your BNPL loan before starting any debt collection process.

You can also expect your BNPL lender to:

• obtain a credit check before you enter a new BNPL loan or increase your credit limit
• provide feedback to the credit reporting agency about your repayment history under your BNPL loan, and
• each time you make a purchase, provide you with information about the dates and amount of payments required as well as details of any fees.

What if I am in financial difficulty?

If you are struggling to meet your repayments, the first step is to contact your BNPL lender.

Your lender may agree to change your loan terms to help you, for example by extending the length of your loan, or reducing your payments for a short time.  Your lender does not have to change your loan, but it is in their best interests to help you get back on your feet. 

You also have the right to request changes to your BNPL loan if unforeseen circumstances cause hardship. For example, illness, injury, loss of employment, or the end of a relationship. Your lender must consider your application reasonably.

In many cases it will be helpful to speak to a financial mentor. A financial mentor can help you to understand your options and help you talk to your lender. 

If you cannot resolve the issue with your BNPL lender then you can contact your BNPL lender’s Dispute Resolution Service. The contact details of the Dispute Resolution Service must be provided in the information provided to you when you signed up to the BNPL loan.

Some rules do not apply

BNPL lenders do not need to comply with some of the rules in the CCCF Act that apply to other lenders.

BNPL lenders do not need to:

• check that a new BNPL loan or an increase to a credit limit is suitable for you 
• check that a new BNPL loan, or an increase to a credit limit, is affordable for you (i.e. that you can make the payments without substantial hardship) if the lender complies with conditions relating to credit reporting and credit policies and providing payment and fee details to you each time you make a purchase
• comply with rules requiring that default fees charged are reasonable.

Further information

You can read more about buy now pay later in our Buy Now Pay Later Guidelines.