Buy Now, Pay Later loans are becoming a popular way to buy large items with bite-sized payments. BNPL is a type of loan that allows consumers to take their item home immediately while paying for it in bi-weekly installments. The pandemic created an eCommerce boom, giving even more of a platform for the use of BNPL loans. While these loans allow for easy access to the items consumers want or need; it can be really easy to rack up a tab using these sites.
There are more than two dozen companies offering BNPL loans, including Affirm, Klarna, Afterpay and PayPal. Terms and features differ among the providers, with some offering longer term loans that charge interest.
Consumers usually encounter the BNPL option when shopping online or through a mobile app, although some brick-and-mortar stores are beginning to offer it as well. Most BNPL loans don’t carry any interest and the application process is quicker and less cumbersome than applying for other forms of credit. The lender may not even pull a credit report.
While this may seem great for the consumer, there are some negatives to be aware of when considering a BNPL loan. Some protections that apply to credit cards may not apply to BNPL loans. For example, consumers may not have the ability to dispute a charge if something goes wrong.
Use BBB’s tips to shop smart:
• Consider it a loan. Even though many installment payment services come with only a few small payments and 0 percent interest, it’s critical to remember you are…
