Ikea launches ‘buy now, pay later’ service for items over £ 99 – how it works
Ikea has launched its own interest-free ‘buy now, pay later’ service in the UK on items valued over £ 99.
Customers will have the option of spreading up to £ 15,000 over three or 48 months, depending on the amount borrowed.
Buyers must be 18 or older to use the service, and they can apply online or in-store.
Ikea says clients will need to prove their employment status, have valid ID and proof of address for the past two years to apply.
The Swedish flatpack giant is the latest in a line of retailers to offer some sort of deferred payment plan in recent months, despite the ‘buy now, pay later’ controversy.
In December of last year, the consumer magazine Which? warned how these services can encourage impulse buying and cause some people to spend more than expected.
Concerns have led the Financial Conduct Authority (FCA) to announce that “buy now, pay later” will now be regulated to prevent millions of buyers from going into debt.
Businesses will need to perform affordability checks before lending and they will need to ensure that customers are treated fairly, especially if they are vulnerable.
When the plans were announced in February this year, the FCA said it would seek to implement the changes on an “urgent” basis.
“Buy now, pay later” allows buyers to defer payments over a period of time, often without interest – but if you can’t make your repayments, your debts can be referred to a collection agency.
High late fees and high interest can also be applied to purchases if you miss a payment – and some agencies will also report missed installments to major credit referral agencies.
Ikea told the Mirror that credit on its products is a “traditional loan” offered by Ikano Bank, which is regulated by the Swedish Financial Supervisory Authority and subject to FCA regulation in the UK.
If a customer misses a payment, the bank will notify the credit referral agencies and a late fee of £ 12 will be charged.
In terms of affordability, Ikea said Ikano Bank would undertake “extensive” checks to ensure customers can afford what they borrow – though it’s unclear what it will use to measure. that.
Some of the household names that have – or are starting – a deferred payment system include John Lewis, Marks & Spencer, and Next.
It follows many other retailers both on Main Street and online who have partnered with Klarna, Clearpay and Laybuy to offer “buy now, pay later”.
Ikea UK Commercial Director David McCabe said: “New financial services are an important part of our ambition to make Ikea even more affordable for the masses and to make the request for financial support more accessible and accessible. more convenient for all customers.
“Whether it’s supporting smaller updates or larger projects, the new offering is designed to be flexible and meet individual customer needs.
“We hope this new service will help customers create the home they dream of and improve their daily lives.
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Martyn James, consumer rights expert at Resolver, urged buyers to think carefully before using ‘buy now, pay later’.
He said: “It may be inevitable that Ikea will move into the world of buying now paying credit later.
“But encouraging people to spend money they don’t have is irresponsible, as thousands find out the hard way. A Billy library is not worth going into debt. “