Buy Now, Pay Later

Tia wants to do online shopping, but she doesn’t have enough money. However….? Tia came across the option called BNPL, which means Buy Now, Pay Later ✨  

Sounds interesting, right?

Buy things now, without paying full money immediately. What exactly is Buy Now, Pay Later? And how does it work? Let’s discuss this in detail.   

Buy Now, Pay Later (BNPL) is a sort of short-term financing that allows you to buy things now and pay for them later, generally without incurring interest. BNPL arrangements, sometimes known as “point of sale instalment loans,” are becoming a more popular payment alternative, especially with shopping online.  

How does it work?  

Buy Now, Pay Later services are provided by different companies. Although each company has its own set of terms and conditions, in general, BNPL works like this:  

1. Make a purchase at a participating retailer (who provides a BNPL facility)

2. Opt for the BNPL option

3. If approved, pay a small amount, let’s say 25% of the purchase value.

4. Pay the remaining amount in interest-free instalments.

What if you missed payments?  

– The lender will charge interest on the outstanding amount if the buyer does not pay within the specified payback window. 

– Late payment fees may be imposed as well. 

– If you do not use this facility carefully, you may find yourself in debt. 

– Any late payments will be recorded to the credit agency, lowering the buyer’s credit score. 

– This might raise the cost of future loans or, even worse, cause lenders to reject any new loan applications.

Pros

The following are some advantages of BNPL:

– Affordability is increased

– Credit is available immediately

– The transaction is safe and secure

– Option to select a payback period

– EMI at no cost

Cons

– Impulse spending

– Late payment fees

– Late payments can affect credit scores and decrease the ability to apply for loans in the future.

– Spending money you don’t have

So should you opt BNPL facility?  

Evaluate all the pros and cons carefully before opting for the BNPL facility. As it might help you to buy things without making full payments. However, you need to make sure that you pay them off on time and use this facility wisely.   

Do let us know in the comment section below, will you opt for the BNPL option?