What you need to know about the Buy Now, Pay Later Programs | New

Small dollar loans have never been more widespread or more accessible to consumers than they are today, but with convenience comes risk. With that in mind, Giving Assistant cited news reports and expert insights to compile a list of five important things to know about “buy now, pay later” programs.

BNPL’s services have exploded in popularity since the onset of the COVID-19 pandemic. A March 2021 study by The Motley Fool found that 56% of Americans had used BNPL programs, an 18% increase from a similar study conducted in July 2020. Adoption of these programs was most dramatic in college-aged and elderly people. The bulk of those who used BNPL’s services said they did so to buy something out of their budget, and about half used BNPL to buy electronics.

Also known as “flexible payments” or “point-of-sale loans“, the most popular buy-it-now and pay-later platforms allow the consumer to pay for a product over a period of six months or a year. , and sometimes even longer, depending on the size of the purchase. At their core, these services quench our thirst for instant gratification, giving consumers the product they want now, funded in interest-free monthly installments they can pay for later. But this emerging field of consumer loans is not without its pitfalls.

According to research by The Motley Fool, 31% of BNPL users said they had made a late payment or incurred late fees, and 36% of respondents said they were at least somewhat likely to make a payment. late in the next year. Klarna, Afterpay, Affirm, PayPal and Zip are some of the companies dominating the BNPL space. Apple, the newest entrant, also plans to fund loans to customers itself rather than relying on a bank.

Keep reading for five essential things you need to know about BNPL programs.

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