Compare interest-free finance providers

Buy now pay later: Spread the cost of purchases over time without paying interest

Last updated:

Interest-free finance, commonly referred to as "buy now pay later" has become an increasingly popular way for shoppers to pay for purchases. Platforms such as Afterpay, Zip, Openpay and Humm allow you to spread the cost of a purchase over time without having to pay interest.

While interest-free finance isn't like a traditional loan, there are still costs involved, and it's important to understand what you're getting into before you apply. Here we will outline the differences between the platforms, the costs involved and how each platform works, so you can decide which one is right for you.

What is buy now pay later?

Buy now pay later is the term used to refer to interest-free credit providers. Many people are even cutting up their credit cards in favour of this potentially more attractive shopping solution.

Interest-free platforms allow you to spread the cost of purchases over time, rather than pay large amounts of money upfront for items that you need.

How does interest-free finance work?

Buy now pay later works in much the same way as the interest-free deals major retailers have offered for years by allowing you to delay paying on your purchases and distributing the cost over a potentially more manageable period of time. The only difference is that you are getting finance from a third-party provider that is available in a range of different stores as opposed to a single retail outlet.

It works in a similar way to layby, but instead of securing an item for later purchase, you receive your goods upfront.

How to use buy now pay later:

  • Sign up with a provider. Sign up either online or in store. You can usually get on-the-spot approval.
  • Make your purchase. Some providers only work with partnered merchants, whereas others are accepted anywhere that takes credit cards.
  • Pay back what you spend. Repayments are usually made in regular instalments and are automatically deducted from your nominated card. You need to make sure that you have sufficient funds available to be able to cover the repayment.
Updated January 28th, 2020
Name Product Interest Rate (p.a.) Min Loan Amount Max. Loan Amount Application Fee
Humm ($1 - $1,999)
Pay no interest ever at a range of stores when you sign up online or via the app and apply for up to $1,999.
Humm ($2,000 - $30,000)
$35 ($35 to $90)
Apply for up to $30,000 with the ability to pay it off between 6 months and 5 years.

Compare up to 4 providers

Interest-free: What's the catch?

Most interest-free platforms, including Afterpay, charge the retailer a fee per transaction. This is how interest-free platforms make most of their money. Retailers benefit from offering options such as Afterpay and Zip Pay because it takes away one of the biggest barriers to closing a sale – it allows shoppers to spend money they don't have.

Another way that interest-free finance platforms make their money is through fees charged for late payments. Because repayments are deducted from your nominated account or card automatically, if there are insufficient funds and you do not reschedule your repayment, you will be charged a late payment fee. These late payment fees can really add up and that can send you on a debt spiral quite quickly. If the interest-free platform does not conduct a credit check to ensure you can repay what you borrow, a late fee could potentially put you in a bad situation.

Some buy now pay later providers may charge other fees, such as monthly account-keeping fees, payment-processing fees or early exit penalty fees. Double check which fees are outlined through the specific provider as charges will differ from platform to platform.

Compare buy now, pay later providers in Australia

ProviderHow it worksCostsLearn more
AfterpaySelect Afterpay at the checkout online or in-store. Repay in four equal fortnightly instalments.
  • Late payment fees of $10 and a further $7 if you still haven't paid the next week
zipMoneySign up online or at the checkout and receive a line of credit between $1,000 and $30,000. You can then use it at any zipMoney retailer.
  • Receive 3 months interest-free
  • 19.9% p.a. rate applies after 3 months to outstanding balance
  • $6 monthly fee applies when you have an outstanding balance
  • Late fees apply
zipPaySign up online or at the checkout for a credit limit up to $1,000. You can use your credit line at any zipPay retailer.
  • 0% p.a. interest rate
  • Up to 60 days fee-free. A $6 monthly fee will apply after this period if you do not repay your purchase in full and remain as long as you have an outstanding balance
  • Minimum monthly repayment of $40
HummSign up for Humm online or via the app to use at a range of stores and pay no interest. Apply for up to $30,000 with terms up to 60 months.
  • $0 monthly fee for terms 2.5 months or less
  • $8 monthly fee for terms 5 – 60 months
  • Late fees apply
OpenpaySelect Openpay at the checkout online or in-store. Repay in fortnightly instalments.
  • Processing fees of $2.50 to $3.95 for long plans
  • Late fees apply
BrighteSign up for a Brighte account online to pay for home improvements or home energy installations. All plans are interest-free.
  • $4monthly account-keeping fee
  • $4.99 late payment fee
CreditLineShop at participating merchants for an interest-free promotional period. Your choice of three 0% interest plans.
  • Establishment fee of $25
  • Monthly account servicing fee of $4.95 for balances over $10
  • $20 late fee
  • ATM and EFTPOS withdrawal fees
  • Payment advance
OnceChoose from two cards that offer various interest-free plans, including 0% for six months on purchases over $250 and 0% for 48 months at participating retailers.
  • Annual fee of $99 p.a.
  • Standard purchase rate of up to 25.99% p.a. outside of interest-free period

Watch: Afterpay vs Credit cards: Which is better?

What features are offered by buy now pay later platforms?

Each provider offers the following features with their buy now pay later service:

  • Varying loan term. Loan terms vary greatly depending on the provider and the retailer. For small-value purchases, it might be only six months, but it could be up to three years for more expensive transactions.
  • Variable purchasing power. Depending on the provider, you can receive purchases prior to payment costing as little as $35 up to as much as $30,000.
  • Repayment frequency. Again, it varies depending on the provider. Line of credit products generally require monthly repayments, whereas merchant payment options are commonly paid back in four instalments.
  • Convenience. All interest-free finance products can be applied for and approved in minutes at the point of sale or online.
  • Paperless. The application process and loan management is done online, so you won't need to physically print or sign anything.
  • Wide acceptance. Line of credit debit cards are accepted anywhere normal credit cards are accepted. The merchant payment option is only available at partner merchants. However, there is a large and growing number of businesses offering this payment option.
  • Ongoing. Unlike a loan, line of credit products do not expire once you pay off your debt. You can keep the card and use it again when required.

What should I consider before I apply?

While interest-free finance may be enticing and suitable in some cases, there are a number of factors to consider before using it:

  • Fees. All line of credit providers charge some form of fee. Most fees are associated with cash withdrawals and missing repayments. Some charge a fee for every single transaction.
  • Interest. Interest is charged after the interest-free period. Interest rates can be high, in some instances up to 29% p.a.
  • Minimum repayments. The minimum repayments are unlikely to repay the loan within the interest-free period. If you do not make additional repayments you will be charged interest.
  • Credit record entry. Interest-free products are still a type of personal loan and are recorded on your credit history as such. Be cautious of over using, or not repaying these products.

It's important to compare a range of interest-free offers before signing up. You can also consider a credit card with a 0% p.a introductory interest rate offer.

Picture: Shutterstock

Read more on this topic

Ask an Expert

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.

3 Responses

  1. Default Gravatar
    RockyAugust 23, 2018

    we’re selling electronics(pcs, laptops…) in store only, price range $900 – $3000. We’d like to provide interest free purchase”to our customers. Which finance provider do you suggest ? Assume we need $40K – $50K per month. Thanks

    • Avatarfinder Customer Care
      JoshuaAugust 28, 2018Staff

      Hi Rocky,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      While we are unable to suggest specific companies, products, or services, you will have a better way of deciding which one is the right for you by reviewing our comparison table above. From there, you can then click on the “Read the review” button to learn more about them.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!


  2. Default Gravatar
    RobertMarch 22, 2017


    Thank you for your, a very honest and helpful website,
    My question is this, Is there any interest-free finance provider who can be accepted anywhere that takes their credit card?
    The reason for my question is this: When shopping at a participating partnered merchants they jack their prices up to compensate for the interest-free finance provider unlike when paying cash you get a good discounted deal for your purchase?

    Thank you.

    Kind regards,

Ask a question
Go to site