If you’re wondering why there’s an app that allows you to buy now and pay later, consider the purpose and intention of this type of gimmick. These are just a few of the many reasons why this type of app exists. Buy now, pay later, or BNPL is a type of short-term financing that allows users to make purchases and repay your item on a fixed schedule, usually for several weeks or months, often with no interest.
If you suspect this setup is a scam, you need not worry. The BNPL assures its users that this setup will provide the money they need to purchase what they want and that the BNPL is a good option if you want to buy, even if you don’t have the money yet. In addition, the BNPL has many popular apps that can provide what you need, apps like Klarna, Afterpay, PayPal Credit, Affirm, and many more. If you want to learn more about BNPL, keep reading.
1. Convenient
You can use the BNPL on the online store while checking out rather than on your standard credit card. The process is typically very fast and makes the transaction process simple. There’s no need to dig through your purse or wallet for your credit card to complete the form. All you have to do is create an account on your app that provides BNPL, and they will figure out a payment plan for you and email it to you. A BNPL platform does not just benefit consumers who shop online.
2. Process of your payments
The majority of BNPL plans have four instalments. On the other hand, some apps offer long repayment plans with interest for large-ticket items. Each payment represents a quarter of the total transaction, including taxes. The first instalment is due upon checkout, and the subsequent instalments are due every two weeks. Many apps encourage customers to sign up for automatic payments so that they do not have to worry about signing their next instalment charge to their debit or credit card.
3. Best use of BNPL (buy now, pay later)
They often use BNPL to purchase items they cannot afford. Buying small amounts can make people spend more than they should. Payment with no interest and the ability to cut it into smaller pieces sounds very appealing. Younger borrowers should remember that they are building their credit history. The repayment history determines the future creditworthiness. BNPL option may not be suitable for you if you are already over-leveraged. Using your credit limit responsibly and repaying on time may grant you an increase in your credit limit for future purchases.
4. Easy set-up and approval
Unlike credit card applications, BNPL providers do not conduct pre-approval credit checks. Creating a BNPL account is simple and usually takes only a few minutes of your time. Often, providers just request some basic information, such as the account where they will get the payments. The steps for creating an account are very similar to those found when signing up for any other website.
5. Payment plans
BNPL providers typically handle it for you by splitting the total amount of your bill into four equal fortnightly instalments, which are then automatically charged to the debit or credit card you’ve designated when they’re due. All you have to do is make sure you have enough money in your account, or it will have interest if you pay late.
6. Where you can use BNPL
Shoppers can use the BNPL facility, like Flipkart and Amazon, as well as banks such as ICICI Bank and HDFC Bank, which offer this payment option on their platforms. The BNPL option is available for a wide range of purchases, from travel booking to apparel, as well as groceries, gadgets, food delivery, and many more. You can use the app to transact with several fintech platforms that extend BNPL loans, including Klarna, CASHe, PhonePe, LazyPay, MoneyTap, PayTM, and Kissht.
7. How the apps make earning
Companies that offer Buy Now Pay Later (BNPL) often charge merchants up to 8% of the purchase price as a fee, similar to a credit card company’s charge. They then make money from advertising, subscriptions, and other methods. Users whose payments are late are subject to late fees, which range from $5 to $15, depending on the app. Some apps also charge a fee for users to use their platform. Quadpay, for example, includes a $1 platform fee with each instalment payment. If a customer continues to fall behind on payments, those fees may rise.
8. Better than credit card
Buy now pay later (BNPL) services typically approve purchases on a one-time basis. Users must request approval from the companies for each transaction. Although there is no processing fee associated with the BNPL facility, a few non-bank lenders do charge a small fee. Credit cards typically have much higher interest rates than BNPL schemes. In contrast, credit cards are a type of revolving credit. Customers can use their credit cards for multiple purchases until they reach their credit limit. Your credit card already lets you postpone your payment. If you do not repay the money by the due date, the payment gains interest.
Conclusion
Those who are struggling to meet their bills might profit greatly from buy now, pay later financing. On this basis, they can meet their needs without worrying about their budget as long as they can pay off their debt. The BNPL can assist them in a variety of situations, including those in which they need to pay bills or establish an emergency fund. Furthermore, keep in mind that having a debt is a responsible thing to do. Always be aware of the risks of lending money and make sure you can pay on time to avoid interest.
