Buy now, pay later has quietly become one of the most common ways Australians pay for everyday things, from clothes to a car service. What many buyers do not realise is that those Afterpay, Zip and similar accounts can shape a car loan application long before you sit down with a lender. From 10 June 2025 buy now pay later is regulated as credit in Australia, and the way lenders read it has moved with it. Here is what that means for your borrowing power and your approval odds.
Buy now, pay later is now regulated credit
For years buy now pay later sat outside the rules that cover credit cards and personal loans. That gap has closed. The Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 received royal assent on 10 December 2024, and from 10 June 2025 anyone providing buy now pay later contracts must hold an Australian credit licence and follow the National Credit Code. The Australian Securities and Investments Commission (ASIC) now treats these products as low cost credit contracts, with modified responsible lending obligations set out in its Regulatory Guide 281. In plain terms, buy now pay later is credit, and it is now assessed like credit.
How lenders see your buy now pay later accounts
When you apply for a car loan, the lender builds a picture of your income and your commitments. Buy now pay later shows up in two places:
- Your bank statements, where a lender can see regular instalments leaving your account each fortnight or month.
- Your credit report, where ASIC's Moneysmart notes that buy now pay later arrangements, late fees and even applications for a buy now pay later account might appear.
Lenders will consider this when you apply for other loans, including a car loan or a mortgage, so it pays to know what your own accounts are saying about you.
Instalments count as a commitment
Serviceability is the test of whether you can comfortably meet a new repayment on top of everything else you pay each month. A lender adds up your living costs and your existing commitments, then checks what is left over to cover the car loan. Regular buy now pay later instalments sit squarely in that commitments column. A few small plans running at once can add up to a meaningful monthly figure, and that figure comes straight off the surplus a lender uses to size your loan. Running the numbers yourself first is worthwhile, because a change in your commitments changes the repayment you can support. Our repayment calculators let you test how a smaller set of monthly commitments moves the figure.
Applications and your credit score
Every time you open a buy now pay later account it may trigger a credit check. Moneysmart warns that a lot of credit checks on your report can influence your credit score and be a red flag for lenders. Late or missed buy now pay later payments can also be reported and can reduce your score. That matters, because your credit score is one of the factors a lender weighs when deciding whether to approve you and what rate to offer. Our guide to car loan rates explains how that link between your credit history and your rate actually works.
The interest free label, and the fees underneath
Buy now, pay later is often advertised as interest free, and for the instalments themselves that is usually true. The cost tends to sit in the fees. Moneysmart points out that providers may still charge late fees, monthly account keeping fees, payment processing fees and establishment fees. None of that interest free framing changes how a lender views the underlying commitment. What the lender cares about is the money leaving your account each month and the repayment history behind it, not the label on the product.
Cleaning up before you apply
If a car loan is on the horizon, a tidy financial position helps. In general terms:
- Close buy now pay later accounts you no longer use, which removes both the visible instalments and the available limits from the picture a lender builds.
- Clear outstanding balances before you apply, which lowers your monthly commitments.
- Avoid a fresh round of buy now pay later applications in the weeks before a car loan application, which keeps new credit checks off your report.
- Request your own credit report first, so there are no surprises when a lender pulls it.
Different lenders weigh these things differently, so comparing options across the lenders on our panel can help you find one whose view of your situation fits. If you already hold a car loan and your circumstances have changed, our refinance pages explain when switching a loan can make sense.
Where buy now pay later fits in the bigger picture
None of this makes buy now pay later a problem in itself. Used lightly and paid on time, it may leave very little trace. The point is simply that it is now credit in the eyes of the law and the lender, so it belongs in the same mental column as a credit card or a personal loan when you are planning a car purchase. With the Reserve Bank cash rate at 4.35 per cent and the next decision due on 29 September 2026, lenders are already looking closely at how much room borrowers have in their budgets. The cleaner your commitments and your credit history look on the day you apply, the stronger your starting position.
