If you have been hearing about the Buy Now Pay Later (BNPL) system of purchasing and want to try it, here are some things you must know first.
Buying is one of the things we human beings can never live without. No matter how broke you get, you will eventually have to buy something. What if there is a system that gives you the opportunity to buy something without actually paying?
There is actually a loan system that could help you do that. However, there are some pros and cons you need to know about this system of purchase before trying it out. It is a loan system but you can easily get approved and you do not need as much credit score as you need for other types of loans.
Read below as I explain to you how this particular loan system works.
Buy Now Pay Later (BNPL)
Buy Now Pay Later (BNPL) is a type of loan system where a consumer purchases the product and pays at a later time. The consumer pays with little or no interest at all.
It is more like you purchasing an item on credit and paying later. However, this particular payment method spreads the payment for a period of time where you pay in installments. Of course, you get to take the item home the very first day you decide to go for this deal.
How it works
Usually, you will have to find a BNPL participating retailer where you will make this purchase. The product is purchased using the regular purchasing procedure and BNPL is selected at checkout.
After selecting a BNPL during checkout, you will also have to select the payment plan and method. Some BNPL services give you multiple choices of payment so you will have to choose how long it will take you to finish the payment. Depending on the price and type of product, the installment period starts as early as 30 days after purchase and ends as far as 12 months after purchase. It all depends on the retailer’s policy.
Most retailers prefer autopay payment methods for this kind of purchase. So you will have to provide your banking or credit card details during checkout. Usually, an amount that will be more than your broken-down installments will be deducted on the first day of purchase.
BNPL Pros and Cons
While it might not seem like it, there are some advantages as well as disadvantages to BNPL deals. Of course, these are fully controllable disadvantages so you do have the upper hand.
| Pros | Cons |
|---|---|
| – BNPL loans are easy to get approval for even if your credit score couldn’t get you into other loan options. – Usually, there is little or no interest at all. – It helps if you do not have the upfront cash to pay for the item. – It does not affect your credit score. | – You do not get discounts or cash backs – You might end up still getting deductions even if you officially returned the purchased item. – In most cases, payments are very difficult to track especially if you have purchased multiple BNPL items. – BNPL deals add to your personal loan debts. |
If you wish to find out more about personal loans, there is a previous article about personal loans on this blog you can read.
These are some of the things you must consider before thinking about BNPL deals. They might not seem to be that bad but there are a few things you need to consider before trying these deals.
If you have the means to purchase with upfront cash, you should do that rather than going for the Buy Now Pay Later deal. The freedom upfront cash payment gives you is more than what BNPL will ever give you.