Online payments have evolved to a point where “buy now, pay later” is a frequently used transaction method today. Millions of shoppers across the country use the option of paying a certain percentage of the purchase price of a product now and paying off the remaining amount in a predetermined number of equal installments over time. Buy now, pay later has multiple benefits, but buyers must be aware of and avoid its pitfalls too.
4 common buy now, pay later mistakes to avoid
Taking multiple loans in a short space of time
The option of purchasing things that one has always wanted and paying a portion of the price later is quite alluring. Thus, some individuals buy several products and services at once or within a few days or weeks without thinking about the accumulated credit. One thing people should not forget is that buy now, pay later schemes are like bank loans. So, as easy as they may make getting access to money and products in a given moment, it also requires users to pay back the remaining amount to banks, with an added interest percentage if they cannot pay on time.
So, if people use this payment scheme several times in a short period, then their debts will also keep rising and they are likely to face mounting deadlines and interest amounts within no time.
Making late payments or defaulting on payments altogether
When people end up buying too many goods and services using buy now, pay later, they are likely to delay the repayments of some of the “pay later” purchases. This has a negative cascading effect on the eventual penalties and other issues they may face later. Late payments or payment defaults damage people’s credit scores, sometimes beyond redemption. A bad credit score makes people unable to get credit lines or loans from banks. A bad credit score also results in people having to always go the extra mile to convince lenders to give them money for essential uses. Finally, a bad credit score makes people “unfit” for using buy now, pay later schemes on their purchases in the future.
Buying exorbitantly-priced goods and services
While buy now, pay later is useful to partially pay off the cost of goods that are momentarily out of the buyers’ budgets, it is still wise for individuals to purchase high-end, expensive products using their debit cards or other more solid payment methods. This is because buy now, pay later loans are, in many cases, collateral-attached loans that can result in banks seizing the property and other valuables of users who cannot repay the amount on time. Also, the interest and repayment amounts of exorbitantly priced goods purchased using buy now, pay later schemes grow exponentially with time. Therefore, if someone purchases a luxury car using buy now and pay later, the repayment amounts become steep within a short time after the purchase is completed.
Missing out on reading the terms and conditions
As implied earlier, buy now, pay later comes with different rules and regulations for different banks. Certain banks approve the scheme as a secure loan. Certain other banks have high interest repayment rates for buyers using the scheme. All in all, people must read the fine print before using this scheme to make any kind of purchase.