There are many different ways that we can buy now and pay later. We might do this using a credit card, store card, shop credit or any other type of loan. This has advantages and disadvantages and it is good to be aware of both so that you can then decide whether it is a good idea for you.
Advantages
If you can buy something now and not pay for it right away it means that you can have things that you would not otherwise be able to afford. People will tend to almost always use this method when they buy a home, for example. They will usually use a mortgage to pay for it, so they live in the home right away but take 25 years or so to pay for it. This might also be used to pay for furniture, cars, white goods and other expensive items. If we want or need things and do not have the money to pay for them, then it means that we can have them right away. Some people may also use this if they need to buy something in an emergency. For example, if their fridge breaks down they might not have the money to pay for it right away and so they will buy it and borrow the money and repay it later so that they can still get one but not have to pay for it all in one go. It can help to spread the cost across a series of months or years.
Disadvantages
When we use a scheme like this, we will normally have to pay extra money. We will need to pay for the borrowing that we are doing and so this will cost us money. It is normal to get charged interest and possibly and admin fee and perhaps extras as well. We will normally be expected to make regular repayments and this could be tricky for some people to afford. If we already have a tight budget, then paying extra out each month could be a real squeeze. If we cannot make a repayment, then there will be extra charges to pay on top of what we are paying already and this could make the loan last longer and it will be even more expensive.
It can be quite difficult to decide whether doing this will be a good idea for us or not. It is a good idea to work out how much it will cost us to do this and then we will be able to work out whether we think that will give us good value for money. It is always worth asking ourselves whether we would still have paid that much money for the item had it cost that much extra when we bought it. It is also good to find out how much you will be expected to repay and work out whether that is an amount that you will be able to afford. Think about the amount of income that you normally have and the amount that you normally have to pay out and whether you will have enough money left to pay for it. If you are happy with the cost and the repayment amount then it means that you will be able to buy the item and then repay it later. You will get the benefits of having it before you actually get around to paying for it. This might be something that you really like the idea of. However, if the item does not last that long and you are still paying for it once you have finished with it, then this can seem unfair.
