Four ways to buy now and pay later
A store account is a credit facility: the store gives you a limit and you buy against it. The law caps the interest at the repo rate plus 14% a year — 21.25% a year at today's repo rate — and the store may charge a monthly service fee and add insurance. It suits regular shopping at one chain, but a single large purchase can keep the account running for years.
An instalment agreement, sometimes called hire purchase, lets you take the item home now; the seller owns it until the last payment. It is credit under the National Credit Act and usually falls under other credit agreements, capped at the repo rate plus 17% a year — 24.25% today. If you stop paying, the seller can take the item back.
Lay-by is not credit. You pay in instalments, the store keeps the item, and you collect it when it is paid in full. There is no interest and no credit check. The Consumer Protection Act protects lay-bys: if the store cannot deliver the goods, it must refund everything you paid, with interest.
A personal loan pays the money to you, so you can buy the item for cash anywhere, including on special. It is unsecured and capped at the repo rate plus 21% a year — 28.25% today — plus an initiation fee and a monthly service fee.
Compare the total, not the instalment
Shops advertise the monthly amount because it looks small. Multiply it by the number of months and add the deposit and any once-off fees: that is the real price. Compare it with the cash price of the same model, and with what a personal loan for the cash price would cost in total.
Look closely at what is added to a store account. Extended warranties and insurance can add a large share to the price. An extended warranty is optional. If credit life insurance is required, the National Credit Act lets you use a policy of your own choice instead of the one the store offers.
Choosing the term
Match the term to how long you will use the item. A fridge or washing machine can last ten years, so a longer term may be reasonable. A phone or laptop is often replaced after two or three years; still paying for the old one when you buy the next is how small debts pile up.
Check the delivery and installation costs as well. A cheaper fridge with paid delivery and removal of the old one can end up dearer than a model that includes both, and those extras are financed too when they go onto the account.
If the item can wait, saving for a few months, or lay-by, costs nothing in interest. If it cannot — a broken fridge, a laptop you need for work — borrow only the cash price and choose the shortest term you can carry.
What a provider checks
Stores and lenders that are registered credit providers must check that you can afford the repayments before they give credit. They look at your income, the debts you already pay and your living expenses, and they check your credit record. That is why the limit a store offers can be lower than the price of the item you want. Lay-by needs no such check, because no credit is given.
If you are declined, ask the provider which credit bureau it used. You are entitled to a free credit report from each bureau once a year, and an error on your record is worth correcting before you apply again.
How RandScout helps
We ask four short questions and match them against the rules each registered provider sets, so you see only those that may consider you. You apply on the provider's site. Comparing here does not leave an enquiry on your credit record.