Buy Now Pay Later, But Should You?

This article is purely of personal opinion, and might contain errors.

The Dilemma of The E-Commerce Boom

Modern-day shopping has taken over our lives, even more so that we are able to instantly do our check-outs online.

We are living in the era where E-commerce has been thriving for years.

With product catalogues that don't seem to have a last page at all, consumers will spend their time on e-commerce sites for hours, even for just the purpose of browsing through the catalogue.

And that is why we constantly need to shop for products to fulfill our wants and needs.

Since the product range that fulfills our desires are seemingly unlimited, we are only limited by income.

The Rise of BNPL

The result of our constant need to purchase items for consumption through e-commerce, gave way to a new form of financial payment, the Buy Now Pay Later system.

Features

Buy Now Pay Later extends your payment term for an item, which is divided into instalments. Instead of paying the full price at one go, you get to purchase the item with typically just one-third of the full price. Repayment will be continuously deducted on subsequent payment periods until the item price is fully repaid for.

But one thing you do realise, there is certainly some extra fees involved from that first payment if you choose to use your credit/debit card for BNPL. Some BNPL platforms practice this.

Lack Of Stringent Credit Assessment

One of the things about BNPL is, it doesn't even need to access your credit score to get you started. The difference from this is, while personal loans approval need to have some form of credit background assessment, Buy Now Pay Later is not subjected to this, as mostly these are administered by BNPL platforms, not banks.

They pay the merchant in full upfront on your purchase, then collect the instalments from you.

The amount of BNPL schemes you can take up are way more than personal loans you can acquire.

But, do you keep track of how many items you have on BNPL schemes?

Are You Paying More Than Anyone Else For An Item?

If you opted for more lenient payment terms by stretching the instalment further, you might find yourself paying more than a person who pays for the item in full price.

Though you might not feel the burn through these smaller payment amount, in the long run you are in fact paying more.

Why? The extra periodic fees add up for extending payment into longer periods.

When You Think You Can Afford As Many Items As You Want

Something interesting about BNPL is the psychology part of things. By breaking down payments into seemingly tiny instalments, it creates the illusion that, with this current level of income, one can actually afford what they want to purchase in the long term.

As long as they are diligently doing their monthly instalments with this income.

However, going by this form of thinking, your monthly expenses adds up, and eventually eats into the savings part of your income.

In the end, you are bound by that stack of financial obligations each month, until you are finally released from it.

So, somewhere in between your instalment period, you will not be able to afford any new purchases anymore, unless you get a job promotion or a bonus boost.

And also, what happens if you default on a single payment? Even more charges to your purchase of the item/s.

Conclusion

Like personal loans, BNPL can be quite a handful, if not managed well. It is merely a means solving a short-term emergency need. for example, you need this chair fast but can only fully afford the amount a month later, BNPL can solve that.

For other things that you need to satisfy your wants, the most cost-effective, burden-free way is still paying full price.