Buy now pay later

bazmo89

Hi I am slightly confused with the advice on buy now pay later products. It says that if am within interest free period it should be extended. Does this mean that if my 0% interest runs out in october it should now be interest free until january?

bazmo89

Hi does anyone know whether the fca is likely to extend repayment holidays on products to 6 months. Because quite frankly 3 months is not massively helpful surely it should be 6 to help put people back on the right path.

Galloglass

The FCA gives "guidance" and points to their rules. So there is no change in the legislation, just a request to companies to follow the guidance but with the knowledge that the FCA have powers should you not follow guidance.

The 3 months thing is again not legislation. The FCA have said they will review the "guidance" after three months so no one knows what will happen.

In any case, if you read the detail, they may not give 3 months to people where the 3 months would result in more harm from an extended payment period. So each debtor has to assessed on his or her circumstances. 

Grumpy_chap

bazmo89 said:

Hi does anyone know whether the fca is likely to extend repayment holidays on products to 6 months. Because quite frankly 3 months is not massively helpful surely it should be 6 to help put people back on the right path.

This is a fine balance.  Taking a three month payment holiday ends up costing the borrower more overall.  All the payment holiday does is helps with cash flow.  If the payment holiday is extended to 6 months, then the total cost increases even more.  I can see people posting threads in a few months saying they took a payment holiday and now they can't afford the increased monthly payment and no-one told them about this and it is unfair by the banks.

Obviously, the increased cost only applies if it is an interest bearing loan, not applicable if it is interest free period that gets extended.  BUT, the increased interest cost is still there and someone has to pay for that extended interest-free period if not the borrow.  Who?