Have you taken advantage of the short term Buy Now, Pay Later loans offered by Klarna and Clearpay to delay paying for your Christmas shopping? ?
These facilities, which allow delayed payment either for a fixed period or in instalments are the fastest growing form of credit, but they are not regulated.
This can seem an extremely attractive way to put off parting with cash, but many people fail to recognise these for what they are – CREDIT!
As there is only a “soft” credit check, which does not affect your credit score, you could end up owing thousands of pounds and if you default, this affects your credit history and you could find debt collectors on the doorstep.
Martin Lewis, the financial campaigner, called for these loans to be “brought into regulation with maximum speed” when he gave evidence to a Treasury Select Committee.
The ASA also recently issued guidance on advertising these services aiming to avoid misleading consumers about what these services are – see link in comments.
This guidance is a great start but like Martin Lewis, I am worried that many people will still fail to take these seriously and they need regulating now.
Like Payday loans, they need to be regulated.