Before, you couldn’t just buy that designer bag you’ve always wanted without having the money to buy it. Nowadays, businesses are giving people the option to make an immediate purchase through instant financing in the form of the Buy Now Pay Later option provided by online merchants. As the name suggests, Buy Now Pay Later (BNPL) allows consumers to purchase anything they need or want as soon as possible. This is especially important because the product is fast-moving, and many people want to purchase it.
The online financing Buy Now Pay Later is such an enticing payment option that it almost seems too good to be true. It is unavoidable for a consumer such as yourself to be skeptical of things that sound too good. Perhaps your doubts come from articles online or theories made by friends. In this article, we will be busting common myths that surround Buy Now Pay Later Financing.
There Will Be An Effect On Your Credit Score
Both true and false. The way you incur debt and habits can significantly affect your overall credit score. It is not a bad thing to consider instant financing when you make a purchase. Although, when you consider the Buy Now Pay Later option, you have to be mindful of your finances. As long as you maintain a good relationship with your lenders through on-time monthly payments, you have nothing to worry about. On the other hand, when you don’t follow through with your agreements, chances are there will be a negative effect on your credit score.
There Will Be Way Too Much Spending
Contrary to popular belief, when you consider the consumer financing option Buy Now Pay Later (BNPL), you will most likely make more purchases. The truth is, the providers of this point of sale financing option can either decrease your ability to make a purchase. In fact, when you’re unable to meet the agreement you signed for the online financing Buy Now Pay Later, they can go as far as freezing your account. More than that, there is a limit to the amount you can borrow to ensure that you will pay the lenders according to your capacity. Most services that offer the BNPL payment option caps the amount at $2 000.
In a study spearheaded by PayPal, the convenience provided by BNPL had shown that around 32% of the consumers are most likely to consider more BNPL plans in the works. However, consumers must remember that no matter what BNPL plans are made available for them, they must remain conscious of handling their finances.
It Gets People To Rely Heavily On Credit
Some people would need to rely on their credit in order to survive. People who would consider using the Buy Now Pay Later online financing option is more likely to be a university student or a milenial. With the buying power provided by this instant financing, they get the chance to purchase their needs. Overall, BNPL should not be considered as the way to go. Instead, it must be seen as a temporary means to an end. It is vital to remember that payments to BNPL should be made in a timely manner once cash is available.
It Is A Way To Manage Your Finances
In some ways, the instant financing option, BNPL, may have the capacity to allow a person to manage their finances. It is always important to be mindful of the miscellaneous things you need to pay every fortnight. With the knowledge of knowing how much will be deducted from your savings account, you get to create a plan. This plan gets to become the budgeting tool that allows you to pay for your monthly expenses plus purchasing some of the things you might want. For example, you have a monthly budget of $100 for something you might want and need. However, these things do not fall under your $100. With the buying power provided by BNPL, you can still make a purchase while remaining within your monthly budget.
In a nutshell, BNPL has the capacity to ease some financial constraints to consumers. However, consumers must remember that with the buying power given by BNPL comes the responsibility of making timely payments.