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Is ″Buy Now, Pay Later″ the consumer credit magic bullet we’ve all been waiting for?

BIScom Subsection: 
Author: 
Nigel Morris-Cotterill

Buy Now, Pay Later is a rapidly growing consumer credit sector. Last year, it is reported, it was used in 3.6% of retail sales in the UK. Is it a panacea or a plague?

Long Read: 17 pages.

Hire Purchase

The final form of consumer credit that we need to think about for the purposes of this BLOG / cast is hire purchase.

Hire purchase is a loan agreement under which the goods are sold to an external finance company which charges interest. Legal ownership stays with the hire purchase company until the final payment is made. The final payment is an additional sum known as an ″option fee,″ which is essentially a fee for processing the legal ownership of the item. Hire Purchase agreements are at interest. That’s a legal term that means interest is charged.

Even in the 1970s, a woman was often required to have a ″responsible man″ counter-sign a hire purchase agreement. We’ve come a long way, baby, as the song says.

Hire purchase was not convenient: an application form had to be signed in the shop and submitted to the finance company. A result might be obtained on the same day if the shop applied by phone or it might be several days. If approved, the shop would contact the customer to say that the goods were ready for collection or delivery.

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