Buy now pay later (BNPL) lenders like Klarna, Clearpay, PayPal Pay in 3, Zilch and Laybuy are now a big part of online shopping.
But some upcoming changes to BNPL rules are likely to make it harder for lots of people to get it. If you have a bad credit score or are on a lower income, is BNPL the right option for you?
First - what is BNPL?
Buy Now Pay Later (BNPL) is a way shoppers can buy an item without paying for it all at once. You can split the cost of a purchase into a number of payments, usually three or four. It’s become popular for fast fashion and retail shopping, but can also be used to spread the cost of washing machines, fridges and other appliances or household essentials.
BNPL is a form of credit - in other words, it's a loan. It can be a useful tool if it works for your situation, and as long as you always remember to pay on time. But it's not the right option for everyone, and it's important to understand how it works, and the potential risks, before you sign up.
What’s the problem with BNPL?
Firstly, you normally have to make an up-front payment at the moment of purchasing. This is a third or a quarter of the overall payment, so might not be ideal, especially if you’re buying a larger item.
Secondly, BNPL providers generally have a set repayment plan - it might be four repayments over six weeks, three repayments over two months, or similar. This is decided by the BNPL, not by you. This might not fit with your finances, especially for bigger payments.
Thirdly, if you miss a payment you might be charged a late fee, or you might be rejected for future loans from that lender. Missing payments could harm your credit score. If your credit score gets worse, it may be harder to get other loans, including BNPL loans, in future.
What’s changing with BNPL regulation?
New rules are currently planned for BNPL lenders like Klarna, Clearpay, PayPal Pay in 3 and Zilch, and are expected to come into force in July 2026.
These rules mean BNPL lenders will have to check if you can afford to borrow, report your payments to credit agencies, and offer more support if something goes wrong .
According to recent research from Fair4All Finance, it is “widely agreed” that as many as 30% of BNPL users will no longer be able to use it. People in lower income households may be at an even higher risk of being turned down by BNPLs.
We wrote about this in more detail recently - read our blog on the new BNPL rules here.
So if you rely on BNPL to spread the cost of everyday essentials, or even the occasional treat, it’s worth thinking about your options now.
Are there ethical alternatives to Klarna and other BNPL providers?
There are other ways to spread the cost of purchases - ethical lenders like Fair for You, for example.
Finding out about these different options, and whether they are right for you, could help you feel more in control of your finances.
An advantage of BNPL services like Klarna, PayPal Pay in 3 and Clearpay is that they are interest-free, as long as you pay on time. Alternatives will often charge you interest, but you might get more flexibility or be able to borrow a different amount of money. It’s important to work out exactly how much you’ll have to repay.
Here are some options worth knowing about:
Fair for You
Fair for You is an ethical lender - not a BNPL provider. We’re a not-for-profit, wholly owned by the Fair Credit Charity. That means every penny we make goes back into our mission of helping more people access fair, affordable credit, including people with bad credit.
Our Shopping Card loan lets you spread the cost of everyday purchases from just £50 up to £350. The loan is on a prepaid Mastercard meaning that you can easily shop in person or online at shops including Iceland, Currys, Argos and more, like with any other debit cards. You can also take out a loan to buy a single item - an appliance like a fridge freezer, a sofa, a child’s bed or something for the garden - on finance, and it’ll get delivered straight to your door.
As a direct lender, we carry out affordability checks to make sure any loan we give you is something you can actually manage. The way we run affordability checks means that we look at more than just your credit history. We can consider lending to people with bad credit scores and people on low incomes - we won’t turn you away based on the past.
Our repayments are flexible - you choose whether to pay weekly, fortnightly, four-weekly or monthly. If your circumstances change or life doesn’t go as planned, we can help you stay on track. You can easily adjust your payment schedule to give you more control.
You can use our online loan calculator to work out how much you could repay.
It’s worth keeping in mind that if you are currently struggling with credit, you are unlikely to be able to borrow from Fair for You until your circumstances change.
Credit unions and other ethical lenders
Credit unions are member-owned, not-for-profit financial organisations. While there are lots of credit unions in the UK, you won't be able to just join any one. Membership depends on where you live, or sometimes where you work - this is called a credit union’s ‘common bond’.
Some credit unions say that you have to become a member and start saving for a certain period of time before you can apply for a loan. Find out more on FindYourCreditUnion.co.uk.
Fair for You is one of several CDFIs (Community Development Finance Institutions) - ethical lenders that exist to serve people who can’t get mainstream credit. They offer different types of loans to support different types of people. Find CDFIs on FindingFinance.org.uk.
What about 0% credit cards?
Some people use 0% purchase credit cards as an alternative to BNPL. If you’re accepted, these can let you spread the cost of purchases interest-free for a set period of time.
You might not be approved if you don’t have a good credit score. So if you’re already finding it hard to access mainstream credit, a 0% card may not be an option - and applying and being turned down can affect your credit score. MoneySavingExpert has good guidance on these if you want to explore further.
So what’s the bottom line?
If you’re looking for an ethical alternative to Klarna, Clearpay, PayPal Pay in 3 or Zilch - the most important thing is to find a lender who is transparent, regulated, and genuinely interested in whether you can afford what you’re borrowing.
At Fair for You, we get that money can be tight, and that sometimes you need a bit of help to spread the cost of something important. We just want to make sure that help doesn’t make things harder further down the line.
Find out more about Fair for You’s Shopping Card loan, or other products you can buy with a Fair for You loan.
If you’re worried about debt and budgeting, our Debt & Money Matters page is a good place to start.
Fair for You loans are subject to eligibility and affordability checks. Missed payments may affect your credit file. Only borrow what you can afford to repay.