If you’ve ever started shopping online, you’ve definitely seen the “buy now, pay later” option. A company like Laybuyoften promotes it, and there is also more conventional catalog finance from online retailers.
Although it may be tempting to postpone payment – and advertisements can sometimes be quite convincing and often deceptive – it is can be a slippery slope to entangle into debt if you are not careful.
What is buy now pay later?
Buy now, pay later contracts often referred to as store financing. They allow you to buy products on credit and repay for them over time, typically in installment payments or after a fixed interest-free duration.
Although this recurring billing accepts in some high-street stores, it is most widely used by catalogs and online stores. They are frequently targeted at children and families. Lay-buy is one of the best examples of famous buy now pay later providers.
Some deals allow you to pay after a certain amount of time (thus the name), while others allow you to pay for your transactions in monthly payments (sometimes referred to as “slices”).
Why is it so popular?
This form of finance has been around for a while, but it has recently gained popularity among younger customers, thanks in part to sleek marketing campaigns featuring A-list celebrities from famous TV shows.
These advertisements also fail to emphasize the dangers of paying in this manner.
Risks include risk to your credit rating if you are late or miss a payment, as well as high interest and fines if you are unable to pay what you borrow on time.
Advertisements on social media often target customers who are less able to afford the goods and persuade them to buy now and pay later. Not only do buy now pay later services do this, but so do some online retailers, particularly clothing retailers.
Buy now, pay later is a simple to use service with innovative use and a low smallest spend of $10.As a result, it’s not surprising that many people incline to use it to pay for purchases.
But, it is easy to overlook the huge negative effect it will have on your loan and credit rating if you do not keep up with your repayments. But, you should note that these risks only apply if you go out of control and started buying things you can’t afford all the time.
What will I charge?
Exact charges differ by provider, but the amount you will pay is generally determined by the payment method you choose.
Pay in installments:
This is the process by which the amount of your buy divides into a few parts – usually three or four. Typically, you must make one upfront fee and grant the supplier permission to collect payment for the remaining monthly payments later.
If you fail to make these later payments, you will charge hefty ‘late payment fees.’ If you manage to miss payments, these penalties will mount up.
This is where you postpone payment for the entire price of your transaction for a specified number of days – usually 14 or 30. You will not need to provide payment information upfront, but you will need to pass a soft credit check’ before your order approved.
When it’s time to pay, you’ll normally get a reminder.