Earlier in the year, we explained the concept of ‘Buy Now, Pay Later’ services – a payment option that allows you to purchase a product in store or online without paying for it immediately.

One of the platforms, Afterpay, has now expanded into travel services.

This means their customers will pay for their holidays in a series of interest-free instalments prior to their departure date. The attraction is in the idea of a luxurious holiday that is paid for in weekly or fortnightly installments, rather than one lump sum in the beginning.

Although many people find that this model works for them, there are some potential risks.

Since the majority of AfterPay users are aged between 18-34, they may not have the financial knowledge or experience to realise what they are committing themselves to. AfterPay exploits a loophole in the national credit laws to forego a credit check before consumers can use its service. As such, many Australians may be unaware of their financial situation, and thus overcommitting to an AfterPay holiday without truly knowing what they will be liable for.

Furthermore, this controversial scheme thrives off interest charges and hidden fees, making approximately $28.4 million from late fees alone. Despite often being advertised as ‘interest free’, if you don’t make your repayments on time, the fees can accumulate to large sums. It all adds up incrementally and can become very overwhelming, especially if you have just splurged on a holiday.

If you would like to learn more about your options to deal with unmanageable debt, contact our friendly and professional debt advisors at Debt Free Australia for a FREE debt assessment. Call us on our 24/7 debt advice line on 1800 462 767.

How is a Debt Agreement better than Bankruptcy?
 
There are several bankruptcy alternatives, one of which is a Debt Agreement. When deciding which option to go for you should consider the differences between the two and how they may help solve your financial troubles. A solution that works for one person may not work for another, so it is important for you to understand what each option entails before you make your decision.
 
Assets
Assets are a common reason why people choose a debt agreement over bankruptcy. If you own an asset that you don’t want to lose, such as a house or a car, then a debt agreement is probably better for you. Under a debt agreement, your assets will not be sold and they will be protected. The only way for you to lose them is if you do not pay any finance owing on them.
 
Stigma
There is a social stigma attached to bankruptcy and some people still find awkward or uncomfortable talking about it. The idea of being labelled as a bankrupt should not evoke shame, but it unfortunately does for some people. As a bankrupt, your status will also go on the National Personal Insolvency Index (NPII), a publicly available database, but it is important to know that you must pay a fee to search it so most people don’t unless they are lending money to you.
 
Travel
Although you can travel overseas whilst bankrupt, you cannot do this without first obtaining permission from your bankruptcy trustee. However, a debt agreement allows you to keep your passport and you can travel freely.
 
If you are exploring your personal debt solutions and would like to speak to a professional to learn more about them, then please contact Debt Free Australia. We offer a FREE initial consultation so that you can get unbiased, expert advice on which one is right for you. Our toll-free hotline operates 24/7 so you can call us at your own convenience on 1800 462 767.