I got £1,500 in debt after buying clothes on a buy now pay later site – I had panic attacks it was overwhelming

MILLIONS of families are purchasing groceries and school uniforms on “buy now, pay later” schemes that can charge up to 40 per cent interest.

Online retailer Very’s TV ad promises: “Everything you need to rule the new school year, with flexible ways to pay.”

Two million kids will return to school in poverty and experts see the schemes as “ticking timebombs”. Customers who miss payments can face fees — or even bailiffs calling.

Yet a Sun on Sunday investigation found there are 1,100 buy now, pay later transactions EVERY HOUR.

Very school uniform buys include Skechers shoes for £49, jackets at £36 and a Nike coat, £70. A pack of three school shirts is £9, and five pairs of trainer socks £8.

You can pay up front or use the VeryPay scheme.

This offers a choice of three ways to settle up — pay now, Take 3 which allows three monthly deposits, or pay later.

But the website warns: “If you choose not to make your Take 3 payments, you’ll pay interest on your balance at your account rate.”

Or you can delay payment by up to a year — with interest added if you do not pay within that time, from the date you ordered the item. This interest is listed on the site as 39.9 per cent.

Ex-mechanic Aaron Paice used buy now, pay later, including at Very, for clothes for his son Jayden’s second birthday, and parts for a PC he was building. The £700 he spent ballooned to £10,000 of debt.

Aaron, 24, from Bristol, said: “As loans stacked up, my work-life balance and mental health began to decline. My credit score plummeted, and so did my mood.”

ABSOLUTE POVERTY

Overwhelmed, he began borrowing to pay for child support, fuel and food. He added: “Thankfully my debt is now being chipped away, but buy now, pay later isn’t the way to go.”

Almost NINE MILLION of us use it to get essentials. The schemes are legal, but 40 per cent of customers now need loans to pay them back.

Richard Lane, of debt charity StepChange, told us pay later has gone from being marketed at lifestyle spenders to those buying everyday essentials.

He said: “It is vital that regulation swiftly brings this lending market into line.”

Admin assistant Tabby Smith, 24, from Tyne and Wear, built up £1,500 debt after falling behind on payments for a £475 clothes spree on a buy now, pay later site.

She said: “It left me £1,500 in debt. I had to move back in with my mum and I suffered panic attacks. I was cleaning and babysitting but the debt was overwhelming.

“Mum took me to Citizens Advice and my GP referred me for counsel-ling. When Mum lent me £1,200, I felt guilty. I shut down my buy now, pay later accounts and social media — the triggers that made me spend.”

Financial expert James Lee said: “We could see a ticking timebomb of debt. People need to go into agreements with eyes open and read the conditions.”

It comes as almost 24million say they are feeling the cost- of-living crisis and 1.5million face absolute poverty, unable to afford food and energy.

Financial services trade association UK Finance says one in eight households are using buy now, pay later. In the 35 to 45-year-old bracket — many of whom have young children — it is one in five.

As loans stacked up, my work-life balance and mental health began to decline. My credit score plummeted, and so did my mood.

Aaron Paice

Shoppers get hooked in by some deals letting them spread payment for up to three months, interest free.

But for the many who cannot pay, it can affect credit ratings.

UK Finance told us 36 per cent of consumers say the schemes have become more appealing since inflation — now topping ten per cent — began to climb, and 40 per cent use credit cards, bank loans or payday loans to pay off debt.

Swedish firm Klarna is Britain’s biggest buy now, pay later lender. It has 18 million customers — the average age is 35 - and is used by 24,000 retailers.

Klarna is available at JD Sports, Asos, Very, Nike, Boohoo, Pretty Little Thing, TK Maxx, Expedia and Miss Selfridge. Its BNPL deals are interest free, so no extra cost is incurred even if customers miss payments.

But on its site, shoppers are just a click away from seeing a traditional financing deal offering credit on items at 18.99 per cent interest.

A Klarna spokesman said it carefully checked customers’ ability to pay but added: “We urge the Government to move quicker to implement regulation which gives additional protections to consumers from irresponsible, unregulated providers and traditional banks disguising high-interest products as buy now, pay later.”

Australian firm Afterpay, which operates as Clearpay in the UK, also offers buy now, pay later.

Its website, advertising school uniform and championing “no fees when you pay on time”, also points out: “A late fee will be an initial £6, and a further £6 if payment is not made within seven days.”

We could see a ticking timebomb of debt. People need to go into agreements with eyes open and read the conditions.

James Lee

A spokeswoman said: “We are trans-parent. For those who pay on time, we do not charge interest. We clearly display that late fees apply.

Citizens Advice says one in 12 people use the schemes to pay for groceries. This week we found buy now, pay later giant Flava offering £100 in free credit to spend on food when we registered — and an offer of a £30 hamper if you placed an order.

It also pledged to offer the cheapest groceries around. But consumer watchdog Which? found some items are 153 per cent dearer.

New Zealand-based Laybuy launched here in 2019.

 It has partnered with Boohoo, Footasylum and JD Sports. Its website boasts you can get what you want now then pay it back in six weeks.

 But it hits non-payers with a £6 fee for each missed payment. Laybuy managing director Gary Rohloff said: “Buy now, pay later offers consumers a convenient and interest-free alternative to credit cards. This is particularly important at times like this, when consumers are struggling.”

In June, ministers announced stricter regulation, yet it is not expected until 2024.

A spokeswoman for Very said: “Very is regulated by the Financial Conduct Authority. We assess each customer using credit checks.  When we lend, every customer has an interest-free option, and customers don’t pay interest on around two thirds of the finance we provide.

“We support customers in arrears by freezing payments, interest and charges, and referring them to debt charity StepChange.”

MUM SWAMPED BY COST RISES

MUM-of-two Laura Bancroft is £450 in debt after using buy now, pay later for school uniforms and sports kit.

Former warehouse worker Laura, 32, from Wigan, began using apps such as Zilch and Clearpay after struggling to afford basics while on Universal Credit.

She even used them to top up her gas meter at her local corner shop. She said: “The rising cost of living means I have no cash to buy essentials.”

With the apps, Laura, who also used schemes directly with stores, would pay a quarter of costs up front then the rest in three instalments over six weeks. She said: “At first it was a godsend but I got overwhelmed.

A Zilch spokesman said: “There are strict safeguards that limit how much customers can borrow.”

DON’T BE DRAWN IN TO DEBT

UNDER no circumstances should parents ever borrow money to buy school uniforms.

Even interest-free credit, as some BNPL deals can be, can lead to debt collectors if you don’t pay up in time.

It’s totally irresponsible of retailers such as very.co.uk to push this form of borrowing during the cost-of-living crisis, which encourages people to spend money they don’t have just before costs rocket in October.

Our biggest three providers of BNPL are Klarna, Laybuy and Clearpay.

But the industry is rapidly growing and there are new providers offering different schemes all the time.

If you do decide to use such a scheme, then make sure you check the terms and conditions.

REPAYMENT PLAN

A study by consumer experts Which? last year found that some retailers offer as many as six options for BNPL, and they can all differ when it comes to late fees, credit checks and repayments.

You should also have a repayment plan in place to avoid being charged extra fees if you fail to meet your payments.

If you are struggling to buy this year’s school uniform then there are other options to consider.

You can check with your local council to see if they offer a school uniform grant.

And all around the country there are free school uniform exchange schemes. Some schools run their own, while councils, volunteer groups and parent collectives also provide free options for people who don’t mind secondhand.

So get involved and grab a bargain – don’t borrow.