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Buy now, pay later providers

Pay for larger purchases over time with an interest-free finance platform

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Elizabeth Barry
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Interest free finance, commonly referred to as “buy now, pay later”, has become an increasingly popular way for shoppers to pay for purchases. Platforms such as Afterpay and Zip allow you to spread the cost of a purchase over time without having to pay interest.

While interest free finance isn’t like a traditional loan, there are still costs involved and it’s important to understand what you’re getting into before you apply. Here, we will outline the differences between the platforms, what costs are involved and how each platform works so you can decide which one is right for you.

What's in this guide?

  1. What is buy now, pay later?
  2. How does interest free finance work?
  3. Interest free: What's the catch?
  4. Compare buy now, pay later providers in New Zealand
  5. What features do these interest free finance providers offer?
  6. What should I consider before I apply?

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What is buy now, pay later?

Buy now, pay later is the term used to refer to interest-free credit providers. Many people are even cutting up their credit cards in favour of this potentially more attractive shopping solution.

Interest-free platforms allow you to spread the cost of purchases over time, rather than paying large amounts of money upfront for items that you want/need.

How does interest free finance work?

Interest free finance works in much the same way as the interest free deals major retailers have offered for years. The only difference is that you are getting finance from a third-party provider that is available at a range of different stores.

It works in a similar way to lay-by, but instead of securing an item for later purchase, you receive your goods upfront.

Here’s how it works:

  • Sign up with a provider. Sign up either online or in store. You can usually get on-the-spot approval.
  • Make your purchase. Some providers only work with partnered merchants, whereas others are accepted anywhere that takes credit cards.
  • Pay back what you spend. Repayments are usually made in regular instalments and are automatically deducted from your nominated card. You need to make sure you have sufficient funds available to be able to cover the repayment.

Interest free: What’s the catch?

Most interest free platforms, charge the retailer a fee per transaction. This is how interest free platforms make most of their money. Retailers benefit from offering interest free options because it takes away one of the biggest barriers to closing a sale. It allows shoppers to spend money they don’t have.

A catch to interest free finance platforms is fees charged for late payments. Because repayments are deducted from your nominated account or card automatically, if there are insufficient funds and you do not reschedule your repayment you will be charged a late payment fee. These late payment fees can really add up and that can send you on a debt spiral quite quickly.

While interest-free platforms usually do a soft credit record when you sign up, they can report defaults to your credit reporting body, which will negatively affect your score. Depending on how many payments you miss, you may also be subject to pay legal fees if action is taken against you.

Compare buy now, pay later providers in New Zealand

ProviderHow it worksCostsLearn more
AfterpaySelect Afterpay at the checkout online or in-store. Repay in four equal fortnightly instalments.
  • Interest free
  • $10 late payment fee and a further $7 if you still haven’t paid the next week
zipMoneySign up online and receive a line of credit up to $8,000. You can then use it at any zipMoney retailer online or by scanning or entering your instore code at the checkout.
  • Establishment fee of $0 – $99
  • Guaranteed 3 months interest free
  • 19.90% p.a. rate applies after 3 months to outstanding balance
  • $40 per month minimum payment or 3% of your balance owing – whichever is greater
  • $6 monthly fee applies when you have an outstanding balance (waived if balance is zero)
  • Late fees apply
zipPaySign up online or at the checkout for a credit limit up to $1,000. You can use your credit line at any zipPay retailer.
  • Interest free
  • Minimum monthly repayment of $40
  • $6 monthly fee applies when you have an outstanding balance (waived if balance is zero)
  • $8 late payment fee and further $8 each week if you still haven’t paid
humm (little things)Sign up for an account online and spend up to $1,000 online or instore with any humm retailer. Pay in 5 fortnightly or 10 weekly intstalments.
  • Interest free
  • $10 late payment fee
humm (big things)Sign up for an account online and spend up to $10,000 on larger items online or instore with any humm retailer. Pay in fortnightly instalments.
  • $20 establishment fee
  • Interest free
  • Fortnightly payments
  • Monthly fee of $2.50
  • $10 late payment fee
GenoapaySign up for an account online and spend up to $1,000 online or instore. Pay 10% upfront and the rest in 9 weekly automatic payments.
  • Interest free
  • $10 late payment fee
LaybuySign up for an account online or ‘Pay by Laybuy’ when checking out. Once approved Laybuy assigns a credit limit you can spend online or instore with any Laybuy retailer.
  • Interest free
  • 6 automatic weekly payments on day of your choice
  • $10 late payment fee
Gem VisaApply online and receive a fast application response. Spend online or instore, anywhere that accepts Visa. Take advantage of finance deals for Gem Visa holders with participating stores.
  • $55 establishment fee
  • $52 annual account fee
  • 6 months interest free on purchases over $250
  • 25.99% p.a. rate applies after 6 months to outstanding balance
  • $20 per month minimum payment or 3% of your balance owing – whichever is greater
  • $15 late payment fee
Q MastercardApply online and supply the necessary documents. Once approved you can spend online or instore, anywhere that accepts Mastercard. Take advantage of special long-term finance deals for Q Mastercard holders.
  • $55 establishment fee
  • $50 annual account fee
  • Interest free up to 3 months
  • 25.99% p.a. rate applies after 3 months to outstanding balance
  • $10 per month minimum payment or 3% of your balance owing – whichever is greater
  • $15 late payment fee

What features do these interest free finance providers offer?

Each provider offers the following features with their interest free finance service:

  • Loan term. Loans terms vary greatly depending on the provider and the retailer. For small-value purchases, it might be only six months, but it could be up to three years for more expensive transactions.
  • Variable purchasing power. Depending on the provider, you can buy purchases prior to payment costing as little as $35 up to as much as $10,000.
  • Repayment frequency. Again, it varies depending on the provider. The line of credit products generally require weekly or fortnightly repayments, whereas merchant payment options are commonly paid back in a set number of instalments.
  • Convenience. All interest free finance products can be applied for and approved in minutes at the point of sale or online.
  • Paperless. The application process and loan management is done online, so you won’t need to physically print or sign anything.
  • Wide acceptance. Buy now, pay later is becoming more widely accepted and there are a large and growing number of businesses offering this payment option.
  • Ongoing. Unlike a loan, interest free products do not expire once you pay off your debt. You can keep the card and use it again when required.

What should I consider before I apply?

While interest free finance may be enticing and suitable in some cases, there are a number of factors to consider before using it:

  • Fees. All line of credit providers charge some form of fee. Most fees are associated with set up costs, service fees, and late repayments.
  • Interest. Though most providers don’t charge interest, interest might be charged after an initial interest-free period.
  • Minimum repayments. A minimum repayment amount may not repay what you owe within the month, so always check what fee you will be charged on the outstanding balance of your account.
  • Credit record entry. Interest free products are still a type of personal loan and are recorded on your credit history as such. Be cautious of over using, or not repaying these products.

It’s important to compare a range of interest free offers before signing up to a buy now, pay later platform.

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