Until recently, if you wanted to buy something you couldn’t afford upfront, you reached for a credit card or took out a loan. Now, when you get to the checkout, you are likely to be faced with other options, including buy now, pay later (BNPL) services such as Klarna and Clearpay.
But what are the true costs of these borrowing options? Which one is best for you?
We spoke to credit experts who recommend doing your research before taking out a loan or using a BNPL service. For example, some buy now, pay later services charge interest rates of up to 34.9% APR, making them more expensive than many credit cards.
For larger purchases, such as a £20k car, you may be required to provide a guarantor or make a large deposit. And while £0-fee loans are available from some providers, these often come with other catches, such as high interest rates or charges for missed payments.