The above buy now pay later Meme came up in my social media feed, and I could barely contain a wry chuckle. Guilty as charged on more than one occasion! 

It seems so simple and convenient, doesn’t it? You’re shopping online or in-store and when the total comes up. That’s when the sticker shock hits you. You really want that new pair of shoes, a kitchen appliance, power tool, or whatever the items may be. However, now that you’re seeing the total on the check-out page or register, you’re doing the mental arithmetic to calculate the hole it’s going to blow in your monthly budget. That’s when you remember the “miracle” that is digital layby and you feel as though all your hopes and dreams have been realised. 

It’s the ultimate in instant gratification. Shop now. Enjoy now. Pay later. It’s so easy, so seductive and so utterly convenient. 

It’s crucial to remember, however, that buy-now-pay-later services are financial products just like any other. Essentially the offer you an instant cash loan with no credit check and no interest that gets you out of the store or website with the goods safely tucked under your arm, or shipping to your home.

If it Looks Too Good to be True…

Like almost all credit products, if used responsibly, these services can be safe and convenient. The problems start when consumers start to get sucked in by the ease and immediate payoff that comes with purchasing something that they really want without having to face up to the financial obligation until a later date. It all seems way too easy, and the temptation is there to continue acquiring more coveted items in the mistaken belief that those 4 easy, manageable payments will make everything OK. Before you know it, you can end up with a whopping bill that can leave you reeling and your household budget in turmoil. 

Take for example the case of Rhonda. Rhonda (not her real name) applied for a small, fast loan online with Speckle. All the details on her application checked out, aside from one glaring anomaly: she had no fewer than 12 active digital layby items on her credit file and was struggling horrifically under the weight of the accumulated repayments totalling well over $1000 a month – far more than her office receptionist’s salary would allow. Her finances in tatters, Rhonda was shattered. For all their protestations of supporting responsible purchasing, she had been allowed to shop herself into effective bankruptcy. Unable to repay all her obligations, she was hit with numerous late charges and ultimately recorded multiple defaults on her credit history that will adversely affect her ability to access finance for long into the future.

Responsible Lending

Speckle is steadfastly committed responsible lending practices. Rhonda’s situation meant that she didn’t qualify for a Speckle loan. However, we were able to provide her with some sound advice for alternative options to manage her predicament without going further into debt. Unfortunately, this is a pattern that is repeating itself all too frequently in our society. More and more consumers are seduced by the temptation to get their shopping fix right now and not have to think about how they’re paying for it until some point in the future. In reality, that point comes along before you know it. If you couldn’t afford the items when you clicked “Buy Now”, you most likely still won’t be able to a few short weeks later. 

For the large proportion of households in Australia that survive month-to-month with little or any savings on which to fall back, the convenience and accessibility of buy-now-pay-later credit products can quickly give way to severe financial difficulty if not used carefully.

While delayed gratification is out of style in today’s world, when it comes to your finances, it can literally save your skin. Before you head online or to the shopping centre, it pays to spend some time sorting through your income and expenses and formulating a budget. The aim is to gain an accurate picture of how much disposable income remains after all your expenses have been accounted for and you’ve put some funds into a savings account – even a small amount each month is a good habit to develop. Once that’s done, spend only what is left on the “nice-to-haves”. When life throws up challenges such as a car in need of repair, unexpected medical bills or higher than forecast utility payments, Speckle offers a fast, safe option to manage the economic peaks and troughs without putting you at risk of a stain on your file that can haunt you for years to come.