Afterpay and Zip Pay. Good or Bad?
Afterpay and Zip Pay are the ‘flavor of the month’ for many when making a purchase. However, are they affecting your credit rating; and what do the lenders think of Afterpay and Zip Pay?
What Are Afterpay and Zip Pay?
Afterpay and Zip Pay are short term credit options provided to spread the cost of a purchase over several weeks, rather than have to pay for the purchase in one hit up front.
Afterpay is spread over 8 weeks. Repayments are 4 equal fortnightly repayments, paid back at an equal installment amount each fortnight.
Zip Pay allows slightly longer, and you can vary your repayments. If you have any balance owing on your Zip Pay account at the end of the month, Zip Pay will charge you a monthly fee. You also must make at least $40- per month repayment if there is any balance outstanding.
Why Are Afterpay and Zip Pay Good For You?
Afterpay and Zip Pay are slightly different in why they can be beneficial to you. Afterpay has no set up or on-going costs and you should be done with your repayments in 2 months. Zip Pay allows you to spread your repayments over a longer period if you want, although there is the monthly cost if you have a residual balance each month. By Allowing you to spread your repayments over a period of time, it can smooth out your budget, where an unexpected required purchase will not leave you without funds until next pay.
Why Are Afterpay and Zip Pay BAD For You?
To be blunt, BANKS HATE Afterpay and Zip Pay.
Afterpay and Zip Pay are seen as ‘quick fixes’ by lenders. A sign that you are not careful with your money. The lender view is you are making purchases that you can’t afford and you are not living within your means. They view it as, “if you can’t afford to save for something now, why should we lend you large amounts of money ?” It may be that you are actually good with your money and you are simply taking advantage of the offer, but unfortunately the lenders won’t see it like that.
Does Afterpay and Zip Pay Affect My Credit Score?
The good thing is, no. At least not when doing a credit check. Although they reserve the right to do a credit check, Afterpay and Zip Pay generally not do a credit check. However, if you miss the require payment, then they are more likely to do a check. Along with this would be the fees for being late on your repayment schedule.
Banks though do a combination credit score. They will do a credit check through the variations credit score agencies, as well as doing their own score depending on numerous things. Among other things, this will include job stability, address stability, number of debts, number of inquiries for finance, and many more. Having Afterpay and Zip Pay will bring down your bank score.
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