Almost half feel overwhelmed by “buy now, pay later” repayments, and one in five have had to be rescued by their parents — while almost one in ten have been contacted by collection agencies
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Gen Z is disproportionately impacted by Buy Now, Pay Later (BNPL) products and end up spending a fifth of their disposable income on paybacks.
More than a quarter (29%) of young adults are concerned about their ability to pay back what they borrowed, and 8% have even been contacted by collection agencies.
A further 44% feel overwhelmed by their paybacks, according to a survey of 2,000 UK consumers who have used BNPL products.
It also found that 12% of 18-24 year old BNPL users felt their credit score was affected and half regretted using unregulated BNPL overall.
A separate survey of 2,000 parents with adult children also found that 66% are concerned they are using BNPL, with over three quarters (77%) supporting calls for stricter regulation of the sector.
And among parents whose adult children have used BNPL, more than a fifth (22%) had to bail them out.
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Antony Stephen, CEO of Barclays Partner Finance, which commissioned the study, said: “Rising inflation and energy bills are contributing to the growing cost of living crisis.
“This makes it much more difficult for consumers, particularly in financially vulnerable groups, to keep track of their spending and many are drawn to BNPL to sustain their current lifestyle.
“As things stand, newer BNPL products are not subject to the same rules as more traditional loan agreements.
“With many providers, consumers do not even receive a detailed affordability check and the credit bureaus do not have any insight into the loans granted.
“It’s a problem because it allows consumers to slide into unmanageable and overwhelming debt — a problem that our research shows is hitting Gen Z shoppers particularly hard.”
The study found that nearly seven in ten (68%) 18-24 year old users of unregulated BNPL products have accumulated debt with multiple providers at the same time.
And 59% of those had deals with three or more vendors at the same time.
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Unregulated BNPL providers are not required to report loans to the credit bureaus, meaning these multiple BNPL loans are not currently visible to other loan providers to include in their own affordability ratings.
This can lead to further lending to a consumer who is already struggling with debt, making the problem worse.
Debt relief agency StepChange has raised concerns about BNPL’s impact on younger consumers and is calling for stricter and more consistent regulation.
Richard Lane, the charity’s director of external affairs, said: “All credit carries an inherent risk of indebtedness for consumers, but with regulated credit these risks are mitigated through strict rules on advertising, affordability ratings and fair treatment of customers.
“Currently, despite the benefits BNPL can offer, the sector still remains outside of these rules and that increases the risk of consumer harm.
“It is of particular concern that young people with less financial experience are becoming such widespread users of unregulated credit.”
https://www.mirror.co.uk/money/personal-finance/buy-now-pay-later-debt-26385428 Gen Z spends a fifth of their disposable income on “buy now, pay later” repayments