The flavor of the season – the BNPL scheme has been adopted by many eCommerce companies, banks, and retailers. Many first-time borrowers enjoy this short-term credit offered while they make their purchases with ease. The bonus is that BNPL does not ask for credit history, unlike other credit options. Since the COVID-19 pandemic hit, the buy now pay later scheme has become even more famous.
Different online payment apps support this new payment method. One can find the option to choose BNPL at the checkout page of your favorite online retail store. They offer customers an alternative way to pay for their purchases in an interest-free mode. Recent studies have shown that more than one-third of US customers have used the service. Therefore, the rise has been significant over the last few years.
So, what is the point of the ‘Buy Now, Pay Later’ digital financing mode? Is the hype really based on benefits? Read this article to find out.
Taking A Deeper Look at How BNPL Works
Using the shop-now-pay-later option, one can spread out payments into equal installments over a while. Apps supporting this new payment method allow users to make online purchases and pay the money off over time. It can be on a weekly, bi-weekly, or monthly EMI basis.
Take, for instance, a customer making a $300 purchase from an eCommerce store. While checking out, there will be different payment options. Of them, choosing the BNPL option will let the customer pay for the item in interest-free installments of 50 dollars each time. However, customers might need to make a minimum down payment according to the payment company’s policies.
Therefore, as long as customers make payments on time, they can evade late fees or interests. This still differs from a traditional credit card, where users need to pay interest every month.
The Major Benefits of Using the BNPL Payment Method
There are some distinct advantages of using the BNPL payment method. Some of the top ones include –
- Users can split up their payments into easy EMIs. This makes buying a slightly expensive item less cumbersome because you can pay in small parts.
- The pay-later payment method does not have a hard credit pull. So, qualifying for the BNPL program is easier than that for a credit card. It usually eases the road for those who do not have a solid credit score.
- It is not a complicated process and hence, is understandable by most people. The transparency of the app is what makes the payment method more convenient to shop with.
- The method also helps a customer manage cash flow. Easy-to-handle EMIs usually fit in every buyer’s budget plans.
However, buyers need to understand that this credit option is not for those looking to improve their credit scores. Buy Now, Pay Later methods do not enhance your credit score even if you pay within due dates. Knowing all the terms and conditions is essential before applying for it.
Wrapping Up
Different companies have different buy now pay later rules and regulations. Although they are based on point-of-sale installment loans, they might vary. It is an excellent way to complete your full payment in a split-up manner to avoid hefty direct payments.
