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Communtity Law Manual | Consumer protection | Buy now, pay later sales

Layby sales

Buy now, pay later sales

What is buy now, pay later?

Buy now, pay later is a payment method that lets you buy an item and pay after receiving it, without any interest added to the amount you owe. It’s different from a layby sale because you get the item as soon as you make the first payment.

Usually, at the time of the sale, you would pay for a percentage of the item, and the buy now, pay later scheme would pay the store the remaining cost. You would pay the buy now, pay later scheme, the rest of the cost of the item in instalments. These companies make money from their charges to the retailers.

Since you’ve legally bought the goods, you can’t cancel the sale once you have made that first payment. Payments are not flexible like laybys, instead they will be locked in, weekly or fortnightly and may be automatically deducted from your account.If you miss a payment, penalties will usually apply. You are within your rights to return faulty goods and get a refund of your payments to date, or you could ask for a replacement or repair.

Consumer laws protect laybys but not buy now, pay later sales.

What fees will I be charged?

Some examples of buy now, pay later schemes are Afterpay, Humm, PartPay and Laybuy.com. You have to sign up to use these services and some conditions apply, such as being 18 years or over.

While there are no interest charges, the catch is that if you miss a payment, default fees are charged. The fee is the same regardless of the cost of the item, and there may be further fees for amounts that aren’t paid within seven days.

Below is a table comparing the different types of buy now, pay later schemes, and the different charges that apply.

Interest

Maximum limit

Repayments details’

Late fees

Afterpay

0%

Depends on your repayment history

4 equal payments due fortnightly

$10

Genoapay

0%

$1000

10 weekly instalments

$10

Humm (big things)

0%

$10,000

Up to 24 months to pay fortnightly

$10

Humm (little things)

0%

$1000

5 equal payments due fortnightly or weekly in 10

$10

Laybuy

0%

Depends on your repayment history

6 weekly automatic payments

$10

Zipmoney

Interest free for 3 months from purchase then charged interest at 19.9%

$10,000

Monthly- minimum payment of $40 or 3% of your balance owing- whichever is greater

$15

ZipPay

0%

$1000

4 equal payments due fortnightly

$8

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