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Store finance debt arrears. How to deal with them.

Store finance is a common way to pay for things in instalments.

Also called ‘buy now pay later’ credit.

Popular providers include:

  • Klarna
  • Clearpay

Many high street stores and online retailers offer interest-free credit.

  • This is often interest free (0% APR) for a fixed time
  • This means you do not pay interest if you pay it back in time

Store finance is regulated by the Consumer Credit Act.

Most agreements are a type of unsecured personal loan. This means:

  • You are the legal owner of the goods straight away
  • The store cannot take goods back if you miss payments

Before taking out store finance credit:

  • Work out if you can repay the debt during the interest-free period
  • Check the terms and conditions for any early repayment charges
  • Make sure you can afford the interest if you cannot pay back the loan in the interest free period

Store cards and persistent debt

You may get a letter about 'persistent debt' if you only make minimum payments.

They may ask you to increase your monthly payment.

Find out more about persistent debt.

Weekly payments stores and rent-to-own

Some weekly payment stores offer a different type of higher-interest finance agreement.

These include:

  • Brighthouse
  • Perfect Home
  • Buy As You View

For these stores, you don’t own the goods until the last payment is made, and they can take the goods back if you don’t pay.

Check the credit agreement you signed with the store to find out what type of finance you have.

  • ‘Fixed sum loan agreement’
    • The goods are yours straight away
  • ‘Hire purchase’ or ‘conditional sale’
    • The goods belong to the seller until your last payment

Need help with store finance debts?

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What happens when the interest-free period ends?

You need to keep paying back the loan after the period ends. Unless you have already paid it off.

  • These payments will have interest added to them
  • The rates are often 20-30% APR
  • This could make it hard to pay back

What if I cannot afford the loan or fall behind?

Your account goes into arrears if you cannot pay back the loan.

The creditor will contact you to:

  • Discuss the missing payments
  • Ask you to catch up

Your account will default if you do not make the repayments.

The creditor can take further action such as:

We can help if you cannot afford your 'buy now pay later’ loan.

You can use our online debt advice tool at any time of day to make a budget and deal with your debts.