Buy Now Pay Later – Interest-Free Finance Broken Down

Buy now pay later services are becoming increasingly popular in Australia. Moreover, more and more Australian consumers are choosing these services when they shop. Not sure how they all work? No stress – Monzi can explain it all.

Please note, certain ideas and products presented in this article may not be offered by Monzi nor the lenders we work with. This article presents only general information. Consider seeking professional financial, taxation, legal or other advice to check how the information and ideas presented on this website relate to your unique circumstances.

What is buy now pay later?

Buy now pay later services, also known as interest-free finance, allow you to repay a purchase over a period of time, without paying any interest. These services may be offered by a number of credit providers, including Afterpay, Zip, Onepay, as well as by retailers and other companies.

Keep in mind, interest-free finance does not function like a typical loan. While you do not repay interest, there may still be costs involved. Monzi explores all of this and more later.

Book now pay later flights

If you spy a red hot deal on flights but don’t have the money in your savings account, you may not have to miss out. In short, a number of travel agents and airlines may allow you to book a future flight for free, or with a small fee attached.

Generally, the agent or airline will not charge you interest if you repay your loan by the deadline.

Examples of companies potentially able to let you book now and pay later may include:

  • Flight Centre
  • Virgin Australia
  • Qantas
  • Student Flights
  • etc.


Fashion waits for nobody – not even your bank balance. If you find a pair of shoes you can’t live without, you may be able to purchase it now and then make interest-free repayments over the coming weeks or months.

Luckily, the range of clothing companies that offer interest-free repayments is immense. In short, a quick search online will show you the sheer number of potential options.

Moreover, you may be able to buy the clothes you want now and pay later online as well as in-store.

Mobile phones

Looking for interest-free instalments on mobile phones and other electronic devices? Luckily, there is a heap of telecommunication providers, as well as electronics retailers that may be able to accommodate interest-free payment platforms.

Get in contact with your service provider for more information.

What are some buy now pay later companies?

As we mention above, Aussies are spoilt for choice when it comes to interest-free payment services. There are now more options than ever.

To give you a better idea, we’ll outline a few of the major players in Australia, as well as a very brief description on how they work.

  • Afterpay. Use online or in-store; repayments made over four fortnightly instalments.
  • Zip Money. Line of credit between $1,000 and $30,000 that can be used at any participating retailer.
  • Zip Pay. Use at any participating retailer; limit up to $1,000. Minimum monthly repayment of $40.
  • Humm. Use Humm for purchases up to $30,000; repayment terms up to 60 months.
  • Openpay. Choose Openpay in-store or online. Repayments made in fortnightly instalments.

How do I sign up for interest-free finance?

There is a range of BNPL service providers in Australia. Moreover, you apply directly with the provider. Once you have made your decision, you can apply directly via the buy now pay later app or through the provider’s website.

Bear in mind, instant approval is not guaranteed. While the eligibility criteria for these services is relatively easy, providers will still assess your application.

The provider may decline your application if they feel you to be unsuitable.

Buy now pay later no credit check Australia

Most interest-free finance platforms will conduct a “soft credit check” when you apply. Moreover, lenders will confirm your details, as well as whether your credit report has any bankruptcies or debt agreements. Despite this, a soft check won’t affect your credit score like a hard credit check would.

You may not be eligible if you have major defaults or other bad credit listings on your report.

Confirm with the service provider whether or not they credit check you.

Is it a good idea to use these services?

Whether or not using a BNPL service is a good idea will depend on your personal situation and preferences. Therefore, we’ve included a list of pros and cons to better equip you to make that decision.


  • Convenient. These services are readily available online or in-store.
  • Easy sign up. Setting up your account is generally simple and may only take a few minutes.
  • Interest. Obviously, credit providers offer an interest-free period. This is ideal if you make repayments on time.
  • Credit card alternative. May be a cheaper alternative to a credit card.


  • Encourages spending. One criticism of these services is that they encourage poor spending habits. After all, you now have the power to take purchases home without spending a cent.
  • Late fees. Providers charge fees for late or missed payments. These costs can quickly add up.
  • Hard to manage. It may be difficult to keep track of your payments if you sign up to multiple services.
  • Future loan applications. Credit providers now consider these transactions when they assess your mortgage or car loan application. Moreover, lenders may not look on these transactions favourably.
  • Credit report. Late or missed payments may be listed on your credit report.

Weigh up the above information. Moreover, consider whether these services are for you. Finally, any credit product should meet your needs and objectives and is also reasonably affordable.

Are there any alternatives to these services?

As we have established, buy now pay later services may not be for everybody. If you are looking for alternative interest-free financing options, consider the following.


A lay-by agreement allows you to purchase a product over two or more instalments before taking it home. Therefore, lay-by may function quite similar to BNPL services, except you take the product home after finish paying it off.

In addition, there are no account keeping or late fees for lay by.

No interest loans

If you earn a low income you may be eligible for the No Interest Loan Scheme (NILS). These interest-free loans from community initiatives allow you to borrow credit to cover the cost of essential items.

The NILS site shows you how to apply. Alternatively, call NILS on 13 64 57.


Yes, we understand that using your savings defeats the purpose of BNPL; however, there is a lot to be said for knuckling down to reach your savings goals. If you aren’t sure where to begin, MoneySmart has a free savings goal calculator.

Can you buy now pay later on amazon?

Yes! Consumers are able to make purchases on amazon now and pay at their pace with Zip.

You first need to have a Zip account and then link it to your amazon account. From there, Zip pays amazon on your behalf when you make a purchase. Next, you pay Zip back over instalments.

Before applying

There’s no doubt interest-free financing can be tempting. After all, with the click of a few buttons you could have that new TV without paying a cent! Despite this, however, there are a number of factors worth considering before you apply:

  • Fees. There will always be some sort of fee or charged applied to your line of credit. Moreover, most fees are associated with withdrawing cash or missing repayments. Confirm the payable fees and charges before applying.
  • Interest. You will be charged interest if you fail to repay your loan within the interest-free period. Depending on the provider, rates may be as high as 29%.
  • Minimum repayments. Making the minimum repayments is unlikely to repay your loan within the allotted interest-free period. Therefore, if you do not make bigger payments you’ll be charged interest.
  • Credit history. Failing to make repayments can affect your credit score. Stay on top of your repayments and do not over use these products.

Struggling with debt

While these services may seem relatively benign, consumers should still be cautious about racking up debt. After all, according ASIC’s MoneySmart site, a 2018 study into pay later services found that in order to meet their repayments, one in six Australians either:

  • became overdrawn on their linked account;
  • delayed other bill payments;
  • borrowed money from their friends or family.

As you can see, BNPL services may encourage over-spending. Moreover, many consumers may fail to consider whether they can afford their upcoming repayments. Before long, you may find yourself struggling with debt.

Get in contact with the National Debt Helpline for free and impartial financial advise. Moreover, you may receive tips to managing and reducing your debt.

You can get in contact by visiting their website or by calling 1800 007 007 bettwen 9:30am and 4:30pm Monday to Friday.

Buy now pay later man walking through mall holding shopping bags

Is Monzi a buy now pay later service?

No, Monzi is not a BNPL service. Instead, we are a lender-finder service for consumers looking for personal loans.

In short, you can apply in minutes with us and we’ll do our best to match you with a potential lender. The following loans are potentially available from Monzi’s panel of lenders:

Small personal loan$300 to $2,000over 12 monthsunsecured
Medium personal loan$2,001 to $4,60013 to 24 monthssecured
Large personal loan$5,000 to $10,00013 to 24 monthssecured

The above table is just a guide. The actual terms of your loan may vary.

Am I eligible for Monzi?

You are eligible for Monzi if you meet the below criteria:

  • 18 years of age
  • Australian Citizen or Permanent Resident
  • Have a personal email address and mobile phone number
  • Have a personal bank account with online banking active.

You’re free to apply if you meet the above. Bear in mind, however, qualifying to apply with Monzi does not guarantee you being offered a loan. After all, each lender in our network is an independent company with their own criteria and processes.

Is there interest on personal loans?

Yes! All lenders within our network charge interest on their personal loans. Moreover, each repayment you make will include the principal amount as well as any interest and fees. As a result, personal loans are not the same as buy now pay later services.

If you are looking for interest-free personal loans, you will need to look elsewhere. In short, any loan you’re approved for through our service will charge interest as well as other fees.

The advertised comparison rate on your personal loan will include the interest rate plus most of the fees and charges. As a result, the comparison rate may be a truer reflection of the total cost of your personal loan.

Moreover, read through your loan agreement carefully before making a decision. In short, your contract includes all the payable rates, fees and charges associated with your loan. In particular, confirm you understand the following:

  • Interest. Interest is expressed as an annual percentage of the principal amount.
  • Fees & charges. Confirm what upfront and ongoing fees apply to your loan. Moreover, confirm what happens if you miss payments.
  • Term. Your term is the length of time you’re given to repay your loan in full. In addition, remember that loans are interest-based. For example, a longer repayment term may result in lower repayments but more paid in overall interest.

Do not sign your contract unless you understand everything. Get in contact with your lender directly if you are confused or unsatisfied with your contract.

How do I make repayments on personal loans?

Repaying your personal loan is straightforward. After all, lenders set up a direct debt from your account. Therefore, your repayments are automatically deducted.

Moreover, you may be able to choose between a weekly, fortnightly or monthly repayment schedule.

Get in contact with your lender if you cannot afford an upcoming repayment. If you give your lender enough notice they may be able to reschedule or cancel your payment for a fee.

Finally, consumers can apply for hardship if their circumstances change. For example, you may no longer be able to afford your repayments if you lose your job or are injured. Lenders may offer you a payment plan if they approve your hardship application.

Buy now pay later and Monzi

While we can’t help with interest-free finance, we do know a thing or two about personal loans. Consider Monzi if you’re looking for a lender offering loans between $300 to $10,000. We might be able to match you up in no time.

Bear in mind, all personal loans available through Monzi’s network of lenders incur interest.

Factor In


Two credit cards
Two credit cards

You won't use a penny to apply for our lender-finding service, but here's some costs you could expect from a lender

Loan amount

$300 - $2,000


12 months


20% upfront establishment fee

+ 4% monthly fee


Loan Amount of $1,000 over 6 months repayable weekly (25 weekly repayments). $1,000 (Principal Amount) + $200 (20% Establishment Fee) + $240 (fees based on 4% per month over 25 weeks) = $1,440 total repayable in 25 weekly installments of $57.60.

Under the current legislation, most small personal loan providers don’t charge an annual interest rate (you’ll know this as an APR) %. The maximum you will be charged is a flat 20% Establishment Fee and a flat 4% Monthly Fee. The maximum comparison rate on loans between $300 and $2000 is 199.43%. This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate

Loan amount

$2,001 - $4,600


13 months

24 months


48% annual percantage rate

67.41% comparison rate p.a.


Loan Amount of $3,000 over 18 months repayable weekly (78 weekly repayments). $3,000 (Principle Amount) + $400 (Establishment Fee) + $1,379.06 (reducing interest) = $4,779.06 total repayable over 18 months with weekly installments of $61.27.

The Interest Rate for Secured Medium Loans is 48%. The Typical Comparison Rate is 67.41% p.a. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Click here to see a worked example.

Loan amount

$5,000 - $10,000


13 months

24 months


21.24% annual percantage rate

48% comparison rate p.a.


Loan Amount of $10,000 over 24 months repayable weekly (104 weekly repayments). $10,000 (Principle Amount) + $5,577.12 (Interest) = $15,577.12 total repayable over 24 months with weekly installments of $149.78.

The Interest Rate for Secured Large Amount Loans is 48%. Maximum Comparison Rate is 48% p.a. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Click here to see a worked example.