Your guide to retail finance options

You’ll often be offered a range of payment options at the checkout, whether you’re shopping in-store or hitting the high street. But do you know your ‘buy now pay later’ from your 0% credit?

Let’s have a look at the different finance options you might spot while shopping with one of our retail partners…

Interest free credit

Spread the cost without it costing a penny more than paying in cash? Yes please!

It’s no wonder interest free credit, often promoted as 0% APR, is so popular amongst shoppers.

Interest free finance is a great way for you to buy what you want now without worrying about parting with the full chunk of cash upfront.

You’ll be given the option to decide what deposit you want to pay. It’s worth noting that some retailers require to you pay a minimum deposit, whereas some don’t require a deposit at all. You’ll also be able to choose how long you want to borrow for – again, depending on the options provided by the retailer. Then, you’ll simply make monthly payments until your finance agreement is paid off.

Pros: It won’t cost you any more than paying in cash, so the convenience of spreading the cost is free!

Cons: You may have less flexibility when it comes to lending term, with many retailers only offering interest free credit options up to 60 months.

Interest bearing credit

If interest is added – usually displayed as an APR Representative – this essentially means there’s a charge for borrowing money.

Think of interest-bearing credit like a traditional loan. You borrow the money you need and make fixed-rate monthly repayments until it’s all paid off.

Pros: You may be able to borrow over a longer period, which could lower your monthly repayments. This could make spreading the cost even more manageable.

Cons: There is a cost associated with borrowing, and you’ll end up paying more in total than you would if you bought in cash.

Buy now, pay later

Buy now pay later does what it says on the tin – you walk away with the product or service you want now and start making repayments after an agreed period of time (your deferred period).

You might choose to settle the remaining balance in full at any point during your deferred period to avoid paying interest (though you may still need to pay a small early settlement fee).

Or, if you haven’t totally settled the balance by the time your deferred period ends, you’ll start making monthly repayments. This will include the total balance plus interest (including the interest you accrued during the deferred period).

Pros: Enjoy a bit of breathing room. Buy what you love sooner, while you have more time to save up.

Cons: It’s slightly more complicated than other finance options at first glance. If you don’t settle in full during the deferred period, the agreement can essentially be treated like an interest bearing credit product.

Unregulated vs regulated buy now pay later options

You’ll often see ‘buy now pay later’ presented as an option on all sorts of purchases, from takeaways to clothes. These short-term solutions are often unregulated, meaning that the lender is not obligated to lend responsibly. Our buy now pay later options are regulated by the FCA, which puts rules in place to ensure customers like you are treated fairly.

Always check out the terms and conditions of any finance agreement to make sure you’re happy with the small print!

Flex finance options to suit your affordability

Many of our retail finance partners offer our tailored finance solutions which allow you to:

• Create a more affordable finance package

Change the amount, term or deposit to turn an otherwise declined application into an accepted one so you can buy the things you have your eye on!

• Reduce the term to pay off your agreement faster

If you can afford to increase your monthly repayments and reduce the term, we’ll tell you. This could save you interest costs in total or simply help you pay off your finance agreement sooner.

• Discover your maximum borrowing power

Are you able to afford that upgrade or add the item you really want? We’ll tell you how much we’ll lend so you can make a more informed choice when you shop.

These options help you to create a finance package that’s tailormade to you and your circumstances.

Look out for soft search when choosing your finance package

Alongside our tailoring solutions, many of our retailers also offer soft search. This allows us to check your eligibility for finance before you submit a full application – with no impact on your credit score. It’s a great way to build confidence both while browsing and at the checkout, as you’ll know whether or not you’ll be accepted before you make your final purchasing decision.

Is retail finance the same as a personal loan?

Not quite. When you take out a personal loan, you apply directly with a lender such as Novuna Personal Finance. The rate you’re offered is personal to you, and will be calculated based on your loan amount and term, affordability and creditworthiness.

Retail finance is still provided by a lender but offered via a retailer. Customers will be presented with a selection of finance options that have been pre-agreed between the finance provider and the retailer. This includes which products are available, the maximum borrowing limit, maximum term, and minimum deposit for finance applications.

The interest rate offered will also be determined by the retailer, so it won’t change depending on your personal or financial circumstances. If the retailer offers our tailored finance options, you may be able to flex elements of your finance agreement (amount, term or deposit) to find the most affordable option for you.

Ready to start shopping?

Look out for the Novuna Personal Finance logo next time you’re browsing!

We make it straightforward to apply for finance – you’ll have your application submitted in minutes and a decision straightaway. Plus, you’ll be able to manage your finance agreement online or via our app alongside any loan agreements you might have with us.