Have you heard of Buy Now, Pay Later (BNPL) programs? Simply put, they are short-term, interest-free loans taken out at the time of purchase which are offered by both banks and third-party service providers. BNPL programs allow you to get your merchandise first and pay it off over time.
Be sure you understand the pitfalls of BNPL programs as most merchants will charge you interest or fees. Unlike credit cards and other types of loans, there has been inconsistent federal oversight for “buy now, pay later” through the CFPB (Consumer Financial Protection Bureau). That means you have fewer protections as a consumer, which is yet another disadvantage of “buy now, pay later” financing.
According to an article on Forbes.com “What starts as a convenience can quietly morph into a liability. A LendingTree survey found that 41% of BNPL users reported paying late in the past year, up from 34% the year before. Many of them weren’t behind by more than a week - but repeat use and overlapping loans compound risk. Nearly a quarter of users said they’d had three or more BNPL loans active at once.”
The Hidden Traps of Buy Now, Pay Later: Understanding the Risks
Avoid the Tricks and Traps of Buy Now, Pay Later Loans
See if we can help you with a short-term loan, credit card, or credit building solution to avoid using these types of programs.
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