Afterpay Loans Explained

Launched in Sydney in 2015, Afterpay is a shop now, pay later service that allows shoppers to pay back purchases instalments, rather than having to pay the full price of their purchase item up front. This can be done by selecting Afterpay as your payment method, rather than other more traditional payment methods like credit cards or Paypal when at the checkout both online or in-store.

While Afterpay loans offer a convenient way for many to make purchases they may otherwise not be able to afford in the moment, there are risks involved in using this service. Read on to discover more about how Afterpay cash loans work, including how to avoid Afterpay debts!

Buy Now Pay Later Services

Buy now pay later services like Afterpay function as an intermediary between a customer and a business. In general, if a customer opts to use Afterpay, Afterpay will front the full amount of the product directly to the retailer upon purchase, while the customer must repay the debt to the intermediary in repayments.

Repayments are usually split into four instalments and made every fortnight, with the first instalment being paid at the time of purchase. While instalments are interest free, there are fees associated with late repayments. Repayments of Afterpay debts are usually made through automatic deductions from your debit or credit card.

Consolidate Your Afterpay Debts

The benefits and convenience of using a service like Afterpay are many, but before opting to use this payment method you should consider the risks involved. These include late payment fees, the effect on your ability to get a loan if payments are missed, and any risks involved letting repayments build up on your credit card over time. The solution to these issues could be to consolidate your Afterpay debts with a debt consolidation loan.

How Debt Consolidation Works

If you have lots of different debts accumulating they can be hard to keep track of. Debt consolidation loans streamline your repayment process by rolling all your debts into one. This makes it easier to keep track of, and pay back money you owe. By consolidating all your debts, you also eliminate multiple annual fees and interest rates which can easily get out of hand, and may end up costing you thousands more than your original loan. Sunshine Loans offers fuss-free debt consolidation loans, allowing you to change from multiple repayments into an easy to manage single monthly payment.


How Much Can You Borrow With Afterpay?

The maximum outstanding limit on Afterpay depends on each individual buyer. Generally, Afterpay will provide you with an estimated spending limit based on factors like how you have used your account before, your past repayment history, and how long you have been using the service for. The maximum outstanding limit is reserved for customers who have demonstrated the ability to make repayments on time when using Afterpay in the past.

Does Afterpay Increase Your Credit Score?

Afterpay doesn't conduct credit checks on customers, and their loans don't directly impact on your credit score, even if you make late repayments. What's more, they promise to not report late repayments to credit authorities or agencies. While Afterpay specifically doesn't check credit scores, other buy now pay later services may do. It's important to check the terms and conditions of these providers before committing to anything.

Does Afterpay Affect Getting A Loan?

Afterpay loans can affect your chances of getting another loan, and not only if you fall behind on repayments that are due. Recent articles say that banks are asking customers to delete their Afterpay account if they want to be approved for a home loan. This is because these types of debts are considered credit liabilities by banks. When deciding whether to approve a loan application, looking at any outstanding debts gives financial institutions an idea of how you manage your money. It's always a good idea to stay within your financial means, and to only use Afterpay for purchases that you know you can eventually pay back on time.