When it comes to borrowing money, there are plenty of services available to help you do so. From personal loans to credit cards to Buy Now, Pay Later (BNPL), the number of options available at your fingertips grows bigger every day. Much like choosing a bubble tea flavour, the choice overload to find the best financial option could become overwhelming.
This article explains the advantages and disadvantages of BNPL services and personal loans and clarifies which one could be the best borrowing option for you.
This article was originally published in October 2022.
On this page:
Money in your bank account and ready to use in 60-seconds3Â once approved.
Sometimes referred to as modern layby, Buy Now, Pay Later (BNPL) services allow consumers to delay the full payment of a purchase. The purchase price is usually divided into four or more equal slices, and the consumer is required to pay back every instalment over a short amount of time, typically once a fortnight.
The majority of BNPL providers don’t charge interest, as many of them offer credit limits below the threshold required to do so. Instead, they tend to charge late payment fees for missed payments, commonly around $7 - $10 each time.
According to Roy Morgan, more than four million Australians (19.1%) used a BNPL service at some point in the year to June 2022, and around 83% of Aussies are aware of them.
Finder research from late 2023 ranked the following BNPL platforms by popularity. Note that some of these are no longer available in Australia, as they’ve closed since this survey was taken:
How many Australians have used a buy now pay later service?
| Platform | % used at least once |
|---|---|
| None | 49.11% |
| Afterpay | 37.2% |
| PayPal Pay in 4 | 17.13% |
| Zip | 16.93% |
| Humm | 4.82% |
| Openpay (no longer available) | 4.23% |
| Klarna | 3.94% |
| Other | 2.66% |
| Bundll (owned by Humm) | 0.49% |
Some Aussie banks also have their own BNPL-style payment options, such as Commbank’s StepPay and NAB’s NAB Now Pay Later.
According to Mozo, the average Aussie who uses buy now, pay later spends $2,208 annually, or around $184 per month. The average monthly spend is highest for 35 - 44 year olds ($214) and lowest for those aged 65+ ($127).
BNPL users spend much more if they use more than one platform. Shoppers with just one account spend an average of $145 a month, compared to $268 for those with four or more accounts.
NAB’s Australian Wellbeing Survey Q4 2023 reported that the average BNPL debt (that is, money still owed on a BNPL account) was $686 in December 2023, nearly $100 less than the $770 from one year prior.
Average BNPL debts by demographic:
| Demographic | Average outstanding balance (Debt) |
|---|---|
| 18-29 | $538 |
| 30-49 | $824 |
| 50-64 | $687 |
| 65+ | $553 |
| Men | $623 |
| Women | $740 |
| Lower-income | $681 |
| Higher-income | $749 |
Below, we’ll summarise both the advantages and disadvantages of using BNPL.
A personal loan is a type of loan offered by lenders and banks to pay for various personal purposes. Personal loans incur a specific interest rate, which is usually based on the applicant’s credit score, credit history, and broader financial circumstances.
Repayments, which are made in ongoing instalments, are based on the interest rate an applicant is given, the loan term chosen by the applicant, and the amount initially borrowed. Terms usually range from 1 to 5 years, and applicants can usually borrow anywhere between several thousand and tens of thousands of dollars. These figures will depend on the lender.
Many people in Australia use personal loans every year. According to the 2023 WeMoney State of the Economy Report, 11.3% of Aussies (nearly three million) obtained a personal loan in a six-month period.
In 2024, demand for personal borrowing is spiking. The official Australian Bureau of Statistics (ABS) lending data shows Aussies borrowed $2.58 billion in April 2024 alone - a near 20% increase over 12 months!
The total value of personal lending in Australia is more than $151 billion as of 2024.
NAB’s Wellbeing report also found that, as of December 2023, the average outstanding personal loan balance was $10,925, down from $12,000 the previous year.
Average outstanding personal loan balance:
| Demographic | Average outstanding personal loan balance |
|---|---|
| 18-29 | $9,538 |
| 30-49 | $12,639 |
| 50-64 | $9,479 |
| 65+ | $11,383 |
| Men | $10,233 |
| Women | $11,525 |
| Lower-income | $5,943 |
| Higher-income | $14,298 |
As with all forms of personal borrowing, the right option for you entirely depends on the situation you’re in. To help you answer this question, we’ll give you two examples of when one option may trump the other.
Buy now, pay later is a suitable option for purchases on one-off expenses that fall below the usual threshold for a personal loan, which is several thousand dollars. For example, buying a new laptop or some nice new clothes for about $1,000 is okay to do with BNPL, but not with a personal loan.
Afterpay, for example, doesn’t really have a minimum spend and has spending limits as low as $600 and as high as $4,000 for select customers.
Jacaranda Finance’s Personal Loans, on the other hand, have loan amounts ranging from $3,000 to $25,000.
Personal loans, on the other hand, tend to be more suited to larger expenses paid off over a longer time frame. Consider some of life's hurdles that get in the way, such as medical bills or car repairs or more significant planned expenses like cars, weddings, holidays or home renovations.
In addition to allowing for larger loan limits, personal loans can also provide:
If you do decide a personal loan is the right method of borrowing for you, consider Jacaranda Finance as your lender of choice. Our fast online personal loans are available from $3,000 to $25,000, with loan terms up to 36 months.
You can apply online or from our Better Credit in as little as 5-12 minutes1, with same-day outcomes2 available. What’s more, you can check if you qualify before you apply without impacting your credit score at all.
Other key features available with Jacaranda include:
Apply with Jacaranda today!
$3,000 - $25,000
Facebook
LinkedIn
Copy Link
