13% using buy now pay later schemes to pay rent

mortgageintroducer.com/13-buy-now-pay-later-schemes-rent

10 September 2020

13.38% of respondents to a survey by Money.co.uk admitted to using buy now

pay later (BNPL) schemes to pay for their rent.

This figure rose to 16.72% of respondents aged between 25 and 34, and further to 21.65%
among those aged between 16 and 24.

10.83% of 35 to 44-year-olds use BNPL payment options for rent, whereas only 6.75% of
respondents aged between 45 and 54 use the schemes.

Calls for rent payments to be included in credit records

A fifth of respondents (19.81%) who admitted to using BNPL for rent payments were situated
in the Greater London region; this was followed by Scotland (17.39%), Wales (17.19%), and
the East Midlands (15%).

Glasgow (22.2%), Brighton (18.52%), Cardiff (18.52%), and London (17%) were revealed to
be the most popular cities for residents using BNPL for rent.

27.12% of those surveyed using BNPL for rent payments were living with friends.

Respondents who had a full-time job were the most likely to admit to using BNPL for rent.

Salman Haqqi, personal finance expert at money.co.uk, said: “While buy now pay later
schemes, like Zilch, Klarna and Clearpay, are quick and easy to join and seemingly harmless,
they are in fact an entry point to debt for many.

“Their quick and easy sign-up process, minimal credit check, and youthful marketing appeal
could be causing shoppers to sign up and spend more than they can afford without
understanding the full risk.

“When taking on any sort of debt, it is important that you understand the risks in full
otherwise you could end up in a cycle of debt that you can’t get out of.

“Our recent study shows that those who use Buy Now Pay Later services tend to overspend or
purchase more than they otherwise would, as they have the option of breaking the payment
into smaller chunks.

“Customers should note all of the terms and conditions and understand completely what they
are signing up for to ensure that they are using the service correctly.

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“For shoppers who are confident they can handle the repayments then it might not be a
problem, but this is not always the case and there will be those who may not be able to pay off
what they spend, and this puts them at risk.”

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