Have ever been in that situation where you were craving a bit of online shopping but won’t get paid until the end of the week? What if the answer to all your woes would allow you to buy everything you wanted now, up to $1000, and then pay it back in monthly instalments? The answer, of course, being ZipPay - an interest-free shopping and payment app that is driving spending in the retail sector and has even had travel companies like Jetstar team up to cash in on the buy now pay later generation.
What are the downsides of ZipPay?
Now that it has come time to apply for a home loan, you might find that getting approval might be a bit more complicated than you expect, and here is why.
It is common knowledge that applicants for a home loan have their credit file checked by the lender before granting finance. The lender will scrutinise your income along with financial responsibilities, missed payments, defaults and penalty fees that appear on your financial statements. The sum of which culminates to your credit score which determines whether or not they will lend you money or not.
In this instance, technically, ZipPay is a credit liability which means that if you have any trouble meeting the payments and late or dishonour fees appear on your statements, then that will tarnish your credit score and affect your ability to get approval for a home loan.
The answer to curb this problem is, of course, to stay on top of your spending habits and make sure that if you do use ZipPay’s services that you stay on top of payments so that you don’t get penalised.
Another factor to consider is that instead of the odd big purchase here and there appearing on your credit card or bank account statement, multiple zipPay payments may have lenders consider these as ongoing monthly living expenses that would need to be factored into loan serviceability. With some lenders asking for bank statements from all accounts for up to four months, you need to be aware that in the current lending environment, your expenses will be sifted through and these types of payments will be considered.
Things to consider
Ultimately, the daily growth in the use of interest-free shopping and payment models like ZipPay is unsurprising. Australians are grasping the opportunity to gain easy credit lines that allow them to buy now and pay later. The critical thing to keep in mind is that ZipPay is a digital credit platform as such you should not be lured into paying for something that you cannot afford.
If you do choose to use their service ensure all payments are made on time as to avoid any late fees or charges for missed payments as these may affect your borrowing capacity when it comes to applying for a home loan. For more information on how buy now, pay later models can affect your ability to get a home loan, call the team at Preston Finance & Insurance on 4052 0751.