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Buy Now Pay Later; does it affect my Preapproval?

Buy Now Pay Later (BPNL) schemes such as Afterpay, Zip and Tyro are widely used by many customers whenever spending money online or now even in person. For some, it is rare to spend real money. Its easy. It's convenient. And I don't need to pay now. For these very reasons, be it for small amounts or large amounts, the ease of Buy Now Pay Later facilities have seen them increase in popularity. But what does this mean when it comes to getting a loan?

For some time, many banks have not had a clear strategy in regards to how to assess Buy Now Pay Later schemes when assessing how much you can borrow. But as they rise in popularity, we are starting to see banks include these facilities as a 'debt' which you must repay therefore affecting what you can borrow.

For example, a Buy Now Pay Later facility than has an 'ongoing limit' could be classified by the bank as a 'credit card' when the full limit is taken as being outstanding and therefore requiring full repayment, even if not fully drawn down. The fact that it could be fully drawn puts it in the same category as a credit card. This reduces how much you can potentially borrow.

For Buy Now Pay Later facility that has a fixed tern (i.e. a time frame to be paid), a bank could consider these as a 'personal loan'.

For short term facilities (usually 4-6 instalments) can be included by the bank as a fixed expenses in your general living expenses and must be disclosed.

The point here to note; while Buy Now Pay Later is very easy and convenient to use, it may affect what you can borrow. And if your servicing is tight and you are on the cusp of being able to borrow the amount you need, worth considering.

So the next time your finger hovers over the Buy Now Pay Later button when purchasing, if you are thinking of taking out a loan, be careful.


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