Have you noticed how Buy Now Pay Later (BNPL), has been popping up everywhere lately? Well, there is a good reason for that. Actually, there are a few good reasons for that. More on that later.
BNPL, also known as Point Of Sale consumer financing, is becoming more and more popular in the eCommerce world. Buy Now Pay Later is one of those “does exactly what it says on the tin” type things. It’s about not paying a hefty price tag all at once, but rather in installments.
But as convenient as it sounds, anything financial can get a little messy. So, here are a few tips on how to use Buy Now Pay Later responsibly.
Consumer Financing Defined
Buy Now Pay Later is a point-of-sale solution. It allows retailers to offer their customers a financial plan in which they can pay in installments instead of one upfront cost. Consumer financing is exploding, that’s partly because most of the eCommerce consumers are Millennials. One thing Millennials don’t like and avoid like the plague is debt.
Of course, millennials still like to like to buy top of the range stuff, they just have a different way of wanting to buy it. It makes it easier to spread the cost out and you can be approved in minutes.
Millions are using providers to make their Buy Now Pay Later purchase. However, there are few things to look out for.
Buy Now Pay Later is an unregulated industry, it doesn’t mean it’s illegal, it just means that you may be more at risk. Consumer financing providers aren’t required to do the same checks like credit card and loan providers do. They aren’t under strict rules to explain what happens if you don’t pay or do any extensive checks to ensure your affordability.
No Hard Checks Doesn’t Mean It’s Easy Money
With consumer financing, you don’t have to go through stringent credit checks. But, that does not mean you should view it as easy money. You need to make sure that you can afford to pay the installments. Whatever the amount is that you want to borrow you NEED to pay it back.
As appealing as it may sound, you need to be responsible with your borrowing limit. The financial burden will fall on you, so you should only borrow an amount you know you can afford to pay back.
Buy Now Pay Later Is Interest-free, But There’s A Catch
One of the main reasons why Buy Now Pay Later has become so popular is because you are not charged any interest. However, that is only if you keep up with your payments. If you don’t you risk the chance of being charged high-interest rates on late payments.
Not only that but if you miss a payment you also run the risk of raking up late fees.
You didn’t think Buy Now Pay Later providers will let you get away that easily, did you?
Repayments Periods Are Much Shorter
Usually, repayment plans differ depending on the provider you are using. They differ because repayments do not span out over years. It’s either, days, weeks, or a few months.
For example, if you use some partners, you can pay in three installments. The first charge will be at the time of purchase, the second after 30 days, and the third after 60 days. It is always a good idea to do a little research on providers and see what type of repayment time periods they offer.
That way, you can better determine whether you really can keep up with the payments in the time frame provided.
One good thing about BNPL is that you can clear your balance earlier than planned if you can or want to without being charged any fees. Although it varies from provider to provider.
Late Payments Can Affect Your Credit Score
Late payments, they happen. But, missing out on payments can seriously damage your credit so try your best not to fall into that pit. Most Buy Now Pay Later providers have the right to file missed or late payments with credit card agencies. So, if you are thinking about buying a house or car in the near future it is best that you do not miss or make any late payments.
The Bottom Line
Buy Now Pay Later, is convenient and a great way to buy a product or service you need but otherwise can’t afford.
However, to reap the full benefits of it you MUST be sensible and ensure you use a trusted consumer financing provider like ChargeAfter.com. Never borrow more than what you can afford and do your research on different providers.
Always be financially sensible so you can enjoy your purchases to the max.