Klarna explains what happens if you can’t make a payment


One in ten Buy Now Pay Later (BNPL) buyers have been chased by debt collectors, representing one in eight young people, Citizens Advice warns.

Millions of buyers use BNPL to split or delay payment, but with so many service reports it begs the question of what happens when we can’t pay.

One of the most popular BNPL apps is Klarna with 15 million users in the UK since their launch in 2014 and since then they have been at the heart of the credit world.

It works by performing gentle credit checks on buyers and offering small loans to help them pay for items like clothes and gadgets.

14 million people in the UK have used BNPL options in the past year

Klarna has been tracking the age of its users since 2018, when the average was 30 and it is now 33, with the fastest growing demographic being 40 to 54.

There is growing concern about the impact of credit lenders on our long-term finances, but Klara said their Pay in 30 and Pay in 3 products have no impact on our credit scores.

If financial circumstances change, it can be a disaster for loans of any size, but unlike credit cards or other short-term credit applications, you will never have to pay more than the cost of the loan. initial purchase made with Klarna.

We asked if this still applied if we couldn’t pay and Klarna explained exactly what happened to their interest-free promise.

Alex Marsh, Head of Klarna UK, said: “A credit card is designed to get you into debt and keep you there, with interest. Klarna is designed to get you out of debt quickly with a clear payment schedule that is free of interest and fees. “

He stated that after a payment is made with Klarna’s Pay Later products, the following occurs.

  • First, we send a confirmation on the day of purchase indicating the payment due date. Then, as the due date approaches, we send more notifications: 2 days before the due date in the case of installments and the day before in the case of the 30 payment.

  • The same day, we send out another reminder. At any time before payment is due, consumers can suspend a payment to give them an additional 10 days.

  • After the due date, we continue to send multiple reminders to consumers that payment is due. All these reminders are sent in several formats: email, SMS and notifications in our app.

  • If, after a period of several months, we still have not been able to contact the client, we will engage a collection agency whose role is to continue to attempt to contact the client.

  • For our Pay in 30 and Installment products, we never sell the debt to collection agencies, we only encourage them to continue to contact customers through other channels.

  • If, after the debt collectors have been contacted, a customer pays in full or returns an item, Klarna will notify DCA and the claim will be withdrawn.

Finally, if they are unable to reach someone with an unpaid bill, Klarna will restrict access to the service until it is paid.

They said: “The customer could not use Klarna for 12 months.

“After that the block is lifted, but they would still have to be approved by our underwriting model which would most likely reject them unless some important positive factors change.”

How to use Klarna, Laybuy and Clearpay safely

If used responsibly, BNPL programs can be of great benefit.

Consumer trust site Which one? have some tips on how to use BNPL applications safely and efficiently.

Set a spending limit: with so many different programs, it’s easy to lose track of all the mini loans you take out. Make sure you set a spending limit so that spending doesn’t get out of hand.

Use reminders: Taking multiple loans from different providers can make it difficult to know what to pay when. Use reminders to know when you need to make refunds.

Return unwanted items quickly: if you’re ordering multiple sizes or just a range of clothes to try on before deciding what to keep, make your returns promptly to ensure your balance is updated before payment is due.

Don’t be silent: if you are having trouble meeting refunds, contact the company. They may be able to freeze late fees or come up with another arrangement.

Citizens Advice urges anyone contacted by debt collectors to get free, independent debt advice. Contact Citizens Advice for more information and see our advice on debt and money.

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