UK buy now, pay later rules bring new affordability checks

Buy now, pay later lenders in the UK must carry out affordability checks on each transaction under rules that took effect in July. Shoppers who fail a check may find a purchase blocked or their borrowing limit reduced, just as spending rises ahead of the festive season.

The rules also require lenders such as Klarna and Clearpay to obtain regulatory approval. Customers gain access to more routes for refunds and independent decisions on complaints if something goes wrong.

The checks vary by purchase and partly depend on the amount borrowed. Buy now, pay later has long been a form of loan, usually repaid in instalments, but it has only been formally regulated since July.

What to do if your borrowing is restricted

Sara Williams, a former Citizens Advice debt adviser who shares guidance as Debt Camel, recommends reviewing whether planned purchases are essential or can wait. Shoppers could also avoid buying several versions of an item, such as clothes in different sizes, if that would require a higher credit limit.

She suggests cancelling subscriptions that may be adding to reliance on buy now, pay later. Anyone using it to cover essentials should contact a debt charity, which may be able to offer support and access to food-bank vouchers.

People struggling with repayments on any type of loan are advised to seek help early. MoneyHelper, a government-backed independent service, offers guidance on finding free debt advice, listing what is owed and prioritising bills. It also warns consumers to be sceptical of debt solutions promoted on social media.