Brokers and market watchers expressed concern about the pay-later program. These programs could disadvantage borrowers when they apply for a loan. 

Zip and Afterpay seem appealing to consumers. However, Nicole Cannon of Pink finance stated that these services can help consumers reduce their borrowing capacity once they get a loan.

“It’s something I do have frequent conversations with my clients about,” she told

Cannon stated that banks now view pay-later plans as an ongoing expense because of tighter lending standards after the royal commission. 

Two additional payments will be made if you make four purchases within the past week. They will then see two months’ worth of that expense — they will annualise that expense. She indicated that this could cause an increase in living costs of between $3,000 and $4,000. 

Borrowers must pay their debts within three years of applying to mortgage

Cannon stated, “You have more negotiation power when banks can see that there isn’t repayments going into the account to prove it’s inactive.” 

Susan Mitchell, CEO at Mortgage Choice, stated that first-home buyers should be cautious about paying-later programs. 

“If you are on the edge of servicing for a home loan, or you haven’t declared Afterpay or Zip Pay transactions as part of your home loan application, your application may be questioned, which could delay your approval time,” she told

Mitchell said that borrowers often fool lenders into believing they will use pay-later programs to finance future purchases. 

“What we’re finding is that these products are used even when they don’t have the money to purchase it, simply because it’s convenient.” Afterpay is not a good option if you don’t have the cash. She stated. 

Buy-now, pay-later groups under review?

Recently, the Reserve Bank of Australia announced that it will be reviewing rules governing buy–now-pay–later (BNPL). This prevents retailers charging customers for services. 

RBA issued a statement stating that BPNL services can prove costly for merchants. 

Morningstar analyst Chanaka Gunasekera said that BPNL could be at risk if they begin charging customers for the pay-later program.

He stated that it was significant because the business model doesn’t require consumers to pay extra if they pay on time.

Afterpay defends its business model

Afterpay said in a statement, “The RBA’s announcement does not mean that it’s currently being investigated or reexamined.” Instead, the proposal of the central bank is a “broadly based periodic review (BBR) of payments industry.”

Afterpay’s chief executive Anthony Eisen stated that it was important to see BPNL businesses more than a payments company. 

“We are a channel for the most difficult-to reach consumers in the world, Millennials or Gen Z. At a Melbourne fintech conference, he said that the true driving force behind his business was “we provide more leads and connects between new and existing customers, and retailers than any country source, probably preferring Google.”