eTopical Precious Finds
Buy Now Pay Later is a way that you can make purchases without using a credit card. It can be highly convenient, but you will want to use caution when making purchases with this type of loan plan.
What Is a Buy Now Pay Later Loan?
Buy Now Pay Later or BNPL is a convenient way to shop. Unlike layaway, you can take the item home the same day that you choose it. It is even more advantageous because you may not be required to leave a down payment.
One type of BNPL sets up four interest-free payments you must pay every two weeks. The first payment may be due the day you shop, but some stores take the first payment two weeks later. The store may confirm your creditworthiness when you decide to do this transaction.
How Do These Loans Affect You Financially?
It Makes Impulse Buying Easier to Do.
BNPL seems to have been created to prevent any objections to buying. This is especially dangerous when it comes to impulse buying. With an impulse buy, you are not really considering the purchase as much as you should. You can easily buy the item, and you don’t have to wait to possess it unless it is being shipped to you.
BNPL eliminates the need to be thoughtful about your purchases, but being thoughtful is necessary. BNPL may be a good option on occasion, but make sure that you can afford to make your payments and that the purchase is something that you really need.
You Can Be Charged Late Fees if You Are Not Careful.
No one can predict the future. You may believe that you can make your payments with ease, but something could come up that makes this impossible to do. Then, you may miss a payment, and when this occurs, the company charges late fees. That’s not the end of the story because it gets much worse. The company reports late fees to the credit bureaus, and this makes your credit score go down. They may even send you to a collections agency, and this is devastating for a credit report.
BNPL Is Not Always Interest-Free.
A BNPL makes sense if you need help paying for a large purchase, but these larger loans may have an interest charge attached. In some cases, the interest rate on a BNPL is higher than the high interest rates that credit card companies charge.
What to Avoid When Paying Back Loans
Making a Late Payment
Having one late payment on your credit report is enough to make future financial transactions much harder. You must make sure that you make all of your payments on time so that your credit score can continue increasing.
Taking Too Long to Repay Your BNPL
If you are charged interest, you must pay your BNPL off as quickly as possible. If not, the longer you take to repay the loan, the longer you will be paying interest, and this causes your purchases to be much more expensive than they would have been if you had not used a BNPL.
