PayPal credit. Complicated and Confusing.

[Deleted User]

I bought £800 worth of IT equipment on a 4-month 0%. All fine, all budgeted for. Paid a bit off, plod on till next pay day.

About a month later, spent £300 on a 12 monthly instalments, something like 10.9% apr. Interest calculated upfront; you know how much, you know what you’re paying in total. First instalment gets paid at checkout, the rest on the same date each month until paid off. 

Supposedly.

I soon after made a substantial payment, expecting it to go towards the IT equipment. It didn’t. It paid off the 12 month plan in one go. Eh? That was under an instalments plan.

I asked, and, as mentioned above, I was informed any payments will get applied to whatever carries the highest interest first. The 12 equal monthly payments thing simply ceased to exist when I made the large payment. It’s to make sure ‘customers only pay the lowest amount of interest overall’. It was made to sound like they’d done me a favour.

No consideration at all, that when the 0% ended in a few months time, the interest, if not paid off, would be quite considerable. Certainly a lot more than the 12 months of 10.9% for the instalment plan I never got the benefit of.

All I could do was put my hand into my other pocket, and pay everything off before the 4 month period ended. That wasn’t in my budget, and meant a lean month elsewhere. It also put me off buying stuff using PayPal and any flaky ‘plans’ they offer. 

In the end, stuff like this eased my decision to ditch PayPal entirely. Following on from a (unrelated) dispute they incorrectly closed against me, they fed me a £30 goodwill payment as an apology. I blew the lot on coffee beans, then closed the account.

My lasting impression is PayPal just make it up as they go along. 

jb000

[Deleted User] said:

I bought £800 worth of IT equipment on a 4-month 0%. All fine, all budgeted for. Paid a bit off, plod on till next pay day.

About a month later, spent £300 on a 12 monthly instalments, something like 10.9% apr. Interest calculated upfront; you know how much, you know what you’re paying in total. First instalment gets paid at checkout, the rest on the same date each month until paid off. 

Supposedly.

I soon after made a substantial payment, expecting it to go towards the IT equipment. It didn’t. It paid off the 12 month plan in one go. Eh? That was under an instalments plan.

I asked, and, as mentioned above, I was informed any payments will get applied to whatever carries the highest interest first. The 12 equal monthly payments thing simply ceased to exist when I made the large payment. It’s to make sure ‘customers only pay the lowest amount of interest overall’. It was made to sound like they’d done me a favour.

No consideration at all, that when the 0% ended in a few months time, the interest, if not paid off, would be quite considerable. Certainly a lot more than the 12 months of 10.9% for the instalment plan I never got the benefit of.

All I could do was put my hand into my other pocket, and pay everything off before the 4 month period ended. That wasn’t in my budget, and meant a lean month elsewhere. It also put me off buying stuff using PayPal and any flaky ‘plans’ they offer. 

In the end, stuff like this eased my decision to ditch PayPal entirely. Following on from a (unrelated) dispute they incorrectly closed against me, they fed me a £30 goodwill payment as an apology. I blew the lot on coffee beans, then closed the account.

My lasting impression is PayPal just make it up as they go along. 

I'm in the very same boat at the moment. I feel like I have been misled and I am so annoyed about it.  I wish now I had just paid for the furniture on a low interest credit card or financed through Dodgy Dave, but hindsight is a wonderful thing.  Alarm bells started ringing when I read from January this year, PayPal are ignoring any complaints or rulings from the Financial Ombudsman.  It is apparent that the Financial Ombudsman are toothless and should be clamping down on huge corporations misleading customers in this way and not rolling over to them.  I can't be blameless and many may say you should have read the small print!!  It's a sneaky way of advertising an interest free period and eventually having to pay interest or paying huge sums to get out of it if you have financed more than one purchase with them.  I would expect this type of thing from a local loan shark and not a global brand like PayPal.  I would not hold out any hope of complaining to the Financial Conduct Authority either.

I could kick myself for not reading their entry on Trustpilot as there are one or two examples of this practice on there.  I suppose I have learnt a valuable lesson from this.

ibyvana

Same here, I purchased a PC part on a 24-month 0% plan then a couple of months later I purchased another part on a 4-month 0% but had to return it, the refund went towards the 24-month plan and now I have to clear the balance of £800 in 4 months instead of 22 months. Whilst I can clear the balance in one payment I still think it's a scummy move from PayPal and it will change how I use them from now on.

sourcrates

PayPal are regulated by the FCA and operate credit facilities using the terms and conditions applied under the consumer credit act 1974.

The way they allocate payments is clearly spelled out in the pre-contract agreement you sign.

You know the one, the one nobody ever reads, but should do.

Its made quite clear how they operate.