There’s so many perks of Afterpay; interest-free payments, you can shop both online and in-store, you don’t need a credit check to sign up, and the list goes on. But without being total Debbie Downers, Afterpay has its downsides that not everyone is aware of. We list our top 3 ‘not so good’ things you should know about Afterpay:
1. Afterpay debts can affect your ability to apply for a home loan.
Yep, that’s right people. Afterpay debts DO affect the ability to apply for a home loan. This isn’t to say you can’t secure a home loan if you have Afterpay but we mustn’t forget that even though there’s no initial credit checks, it’s still classified as spending money you don’t necessarily have. When you visit us, we take customers through an assets and liabilities table so we can identify what you own and what you owe. That way, we’re aware of outstanding debts, including Afterpay, as it’s the lender’s responsibility to factor in all areas of money owed.
2. Pick when you pay? That’s a no from Afterpay.
The inability to choose your time of payment on Afterpay can lead to issues such as being overdrawn, delayed payments, late fees, and in some instances, the need to borrow more money. Not being able to choose when you make a payment creates an incentive to ensure purchase decisions are made at a responsible time, however for those who are reckless spenders, financial burdens can creep up pretty rapidly.
3. Impulse spending alert!
Buy now, pay later programs are most certainly useful, for those of us who know the boundaries and are good at paying off debts. But for some demographics, particularly those of younger generations, there’s little understanding of the consequences of impulse spending, that’s until they realise how much they’ve spent. This is where budgeting comes into play. The convenience of Afterpay can become a trap, so it’s important to stick to a sensible budget. This allows room to still enjoy the many benefits of Afterpay, without landing yourself in hot water!
To avoid any of the above risks in the future, here are a few hot tips:
When it comes to borrowing money, read the fine print. This isn’t really the time to be clicking ‘I agree’ and moving on. Make sure you’re aware of your rights and the rights of the company to avoid any issues in the future.
Budget, budget, budget. And we’ll say it again, budget! Just because it’s a buy now, pay later circumstance, you mustn’t forget the ‘pay later’ part. Everytime you scan that Afterpay barcode, you have a debt to pay so it’s important to think ahead.
Debit cards are the right choice with Afterpay. Don’t add to the stress of money owed by attaching a credit card to your account. If you don’t have a debit card, trust us and get one! Money management becomes a little easier when you know you’re spending money that your future self will actually have.
Group your banking apps into one folder on your phone. This will subconsciously encourage you to stop and think before making a purchase. We highly discourage placing it next to your candy crush app, Afterpay is no game!
We’re here to help you structure your lending so that it leaves you flexible to do all the things you want in life.
Get in contact with us if you’re planning ahead for a loan, and want some advice on how to get in prime position.