Buy Now, Pay Later Plans: What You Should Know if You’re New to Canada

Key Takeaways 

• BNPL plans are becoming more widely available, and act like short-term loans.  

• Most BNPL users are aged 18–44, citing budgeting (42 %) and affordability (39 %) as top reasons to choose instalments 

• Common BNPL purchases include furniture, electronics, and fashion. 

• Risks include overspending, late fees, and credit‑score effects. 

• Newcomers should read terms, track payments, and use BNPL sparingly. 

What Is Buy Now, Pay Later in Canada? 

BNPL services act like short‑term loans, letting you buy now and pay in equal instalments over weeks or months, often with 0 % interest if you pay on time. These plans act like short‑term loans and come in two main types: equal payment plans with set instalments, and deferred payment plans where you pay the full balance by a due date. They’re both widely available at online retailers and in-store – though not all retailers have adopted BNPL financing.  

Who Uses BNPL in Canada — and Why? 

A 2021 Financial Consumer Agency Canada (FCAC) pilot study surveyed 1,034 Canadians and found that while usage remains low overall, young adults lead the way. The largest share of BNPL users was aged 18–44, with 71 % of 18–34‑year‑olds choosing online fintech platforms and over 85 % of those 65+ using credit‑card‑linked plans. Usage didn’t vary by gender. 

It’s worth noting that, while we couldn’t find data on newcomer usage of Buy Now Pay Later plans, it’s possible newcomers are accessing this type of financing. Some providers don’t require a credit check, which would make this type of financing more accessible for newcomers than getting a credit card. Others only run a soft credit check and newcomers may qualify after just setting up a Canadian bank account. Again, this is a lower barrier to entry than many credit cards in Canada for newcomers. 

As for why Buy Now Pay Later financing is booming, respondents most often said they used BNPL “to help me budget” (42 %) or because they “couldn’t afford the entire purchase right away” (39 %). A further 23 % cited the desire to avoid interest and fees. These services let shoppers bridge timing gaps without lengthy loan applications, which can feel like a blessing but also may become burdensome if not carefully managed. 

What Are the Drawbacks of Buy Now, Pay Later? 

BNPL’s simplicity can backfire and may encourage those who use it to overspend. 74% of users spent over $200 on their last purchase, and 20 % said instalments encouraged them to buy more than planned. Purchases ranged from furniture (39 %) and electronics (32 %) to clothing (23 %). 

Another drawback is that many users find key features unclear, according to the 2021 FCAC study:  

• 44 % didn’t know how BNPL affects their credit score,  

• 36 % were unsure about dispute processes, and  

• 21 % didn’t grasp penalty fees for missed payments.  

FCAC warns that missing a payment can trigger high interest rates, setup fees, or NSF charges—sometimes outweighing any introductory 0 % rate. Some providers do also report missed payments to credit bodies, so your BNPL purchases can impact your credit score.  

If you’re keen to learn more about improving your credit score in Canada, check out our partner, Borrowell. Borrowell is proudly Canadian and has over 3 million users. It’s helpful because it sends out weekly credit reporting, personalized financial recommendations and a ton of educational resources covering credit scores in Canada. Oh – and the best part – it’s entirely free. It’s free to sign up and free to use.  

Should Newcomers Use BNPL Plans in Canada? 

BNPL can help newcomers manage cash flow in a new country, avoid high credit‑card interest, and build credit history without hard inquiries. Plus, zero‑interest plans and quick digital enrolment simplify access to essentials while you settle in. 

But use it like any credit: read all terms, note fees and due dates, and set calendar reminders for each instalment. Crucially, you should only choose BNPL for purchases you can repay on time to avoid unexpected costs – and keep track of how much you owe so you know what money will be leaving your account.  

With clear budgeting and cautious use, BNPL can be a helpful tool for newcomers settling in Canada.