How to Use Buy Now, Pay Later Loans to Go Holiday Shopping –

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  • “Buy now, pay later” loans are increasingly common as large retailers like Amazon, Walmart and Target partner with fintech companies like Afffirm to offer BNPL facilities.
  • Consider factors such as the affordability of your purchases, dispute resolution processes, late fees, interest rate risks, and credit rating implications before using a BNPL loan.

The holiday season has just started and there are Black Friday deals everywhere! You probably want to do some vacation shopping ahead of time, but don’t know where to get the money. Buyers are increasingly turning to different types of personal loans to pay for their holiday purchases. These include ‘buy now, pay later’ loans, as these financial products allow borrowers to spread the cost of their vacation purchases into installments, similar to installment loans, but these are usually due every fortnight.

Data from the Morning Consult survey reveals that 21% of buyers are expected to use ‘buy now, pay later’ (BNPL) loans for their 2021 holiday purchases. The survey also found that BNLP was used in around 100 billion dollars in purchases last year and continues to grow rapidly. When it comes to usage, BNLP is continually becoming mainstream, with retailers such as Walmart, Amazon, and Target being caught in the trend. Recent developments such as the Affirm partnership with Amazon and Target add credibility and evolve BNPLs.

Even though BNPL loans are good choices for vacation spending because they allow you to spread your vacation expenses over time, you should use them with caution. This article describes the ways you can safely use BNPL for your holiday shopping.

Things to Consider When Using Buy Now, Pay Later Loans

  1. Avoid overspending: Note that you might be inclined to overspend with BNPL loans. You need to be smart in your use of BNPL and only use it when you are sure you are getting enough money to pay the balance. Keep in mind that it’s easy to overspend when using a Buy Now, Pay Later loan. A recent study found that 66% of buyers using BNLP loans said they spent more than they would have had if they had paid cash for their purchases.

Payment methods like payday loans and BNPL loans are believed to encourage overspending since the costs are less visible to consumers. Indeed, consumers receive an invoice long after making their purchases. Thus, they may end up spending more at the checkout because the true cost of their purchases only hits them later.

Therefore, if you really need to use BNPL loans to buy that PS 5 for your teenage son for Christmas, make sure you have an idea of ​​the amount of each installment, the loan interest rate, the when each installment is due and whether you can afford the full value of the purchase you are making.

  1. Impact on your credit score: If you fail to pay your BNPL loan deadlines, it could negatively affect you by lowering your score. This can happen whether you set them in full or on time. Hence, you need to be careful about the effect these loans might have on your credit report.

To avoid this, it is advisable to go for a BNPL facility that does not report to the credit bureau. A good example of such a provider is Afterpay which offers a six week BNPL loan option at 0% interest rate, and does not report to the credit bureau.

Therefore, do your own research and see if the lender will do a credit check and report to the bureaus before taking out a BNPL loan.

  1. Dispute resolution channels: The “Buy now, pay later” loan is a relatively new method of financing with unclear consumer protection guidelines and government regulations in place for credit or debit cards. Major BNPL providers like Afterpay and Affirm have developed their own return policies and dispute protection channels. However, it can be confusing for consumers as to who to contact in the process.

Therefore, before taking out a BNPL loan, make sure you understand the dispute resolution channels. For example, who do you contact when you need to return or have a problem with a product you purchased with a BNPL loan.

Final result

Buy now, pay later, loans may be provided to help finance your vacation shopping this year. While these loan facilities are convenient and easy to use, you should clearly understand how they work before signing up.

Note that people tend to overspend during the holiday season. So, before using the BNPL loan to make these purchases, you need to know if you can afford to buy the item you swear to buy and if you will be able to pay it off in full in the near future. You should also pay close attention to your supplier’s dispute resolution process and return policy, if they perform a credit check, report to the credit bureaus and related costs such as fees. delay and interest rates.

About Nancy Lubale PRO INVESTOR

Nancy is a successful financial analyst, crypto and content writer with many years of writing experience in finance and blockchain. Nancy has produced quality content for cryptocurrency industry websites including Krptotrends, Forexcrunch, and InsideBitcoins. She is a Certified Cryptocurrency Expert (CCE) from the Blockchain Council. His interests are research on crypto-assets, Fintech, Blockchain, DeFi, NFTs, and personal finance.

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