Another said that fuel purchases through Afterpay had been a problem for some time. The financial mentor said people were having to choose between fuel and food because there was not enough money to pay for everything they needed.
“Clients I am currently working with will not enter into a repayment plan with Afterpay as they depend on Afterpay to pay for food and/or fuel on the regular. It is a vicious debt trap for many who rely on it for the essentials.”
A spokesperson for Z Energy said people chose different payment methods for a variety of reasons. “Our focus is on providing customers with a range of payment options and the flexibility to choose what works best for them.”
Fincap, the network for financial mentors, agreed people were increasingly turning to buy now pay later (BNPL) services for food and fuel.
“Using BNPL loans for essentials that are required at least every week can cause people to end up in a debt treadmill where they are borrowing to make ends meet and find it extremely difficult to find their way out of. It is a great time to speak to a financial mentor if you feel this is your only option to get by.
“We recommend more is done to ensure buy now, pay later loans are not unaffordable from the start.”
Afterpay said people had been using credit cards for purchases for decades and Afterpay was increasingly seen as a better alternative.
“We believe it’s important for all consumers to have access to a safe, simple and transparent solution like Afterpay that helps them budget and manage their spending, for everyday items like groceries or one-off purchases like a new refrigerator. Afterpay is a free service for customers who pay on time, and a safer, more affordable alternative to traditional credit, which can charge interest rates of more than 20%.
“We have strong consumer safeguards built into our product, including responsible spending rules to help ensure customers don’t revolve in debt, and if a customer misses an instalment payment, their account is paused. In addition, late fees are fixed, capped, and don’t accumulate or compound over time.”
Centrix’s latest update showed buy, now pay later arrears at 7.1%, but 4% below last year.