The Rise of Buy Now Pay Later
It is an exciting era for consumers. Current consumers can take advantage of many different options that enable them to improve their quality of life. One of the latest innovations that promotes a higher quality of life is the “buy now, pay later” option.
You have likely seen more of these options over time as you have browsed items at different online shops. This option is intriguing because you can divide your transaction and split up the payments over several months. It is indeed a fascinating idea because it helps you comfortably make purchases and minimize further costs. In addition, people appreciate it because it differs from regular credit cards.
One will not have to incur significant interest charges as they would normally face on credit cards. With credit cards, one would notice that interest starts to accrue after the 30 day grace period. Conversely, buy now pay works a little differently.
Who are the Buy Now and Pay Later Companies?
There are variety of buy now, pay later companies, a few of the more prominent firms are listed below.
- Affirm
- Afterpay
- Klarna
- Luthersales
- Paypal
- Sezzle
- Zip
Each of these companies are leading players in the buy now, pay later sector and offer varying terms. For instance, LutherSales states that it can process applications quickly and caters to people who are interested in everything from cell phones to TVs and more. It emphasizes the point that it will work with people on all points of the credit profile spectrum. If you have good credit or bad credit, it will quickly review your application.
The difference that you will notice among these companies also may be the area of coverage. For instance, Affirm, founded by Max Levchin, in 2012, is present at places like Walmart and Amazon. As such, it makes more sense why more people aware aware of Affirm and may have Affirm accounts.
Affirm tends to approve those who have 640 or higher when it comes to their credit scores.
The other variance is noted in the length of the payment terms.
The Benefits of Buy Now Pay Later Programs
What are the simple benefits of buy now pay later programs?
These programs and service providers enable you to make installment payments and manage purchase over time. It differs from credit cards because it has a fixed amount of time to where you can make payments without interest. That is valuable because it helps you to minimize stress when managing your spending at places that may range from Amazon to Target and Walmart.
It is a very beneficial product if you know that you need the support now but can make payments in line with the terms stated by each firm.
If you think that you may spend more than you can handle to pay off over a few months, or what is in line with the terms provided by the firm, you may want to hold off.
Be Aware of How these Providers Report to Credit Bureaus
While the leading BNPL providers may be more lenient, you may notice that others may feel the need to conduct hard credit checks. Indeed, providers like Affirm conduct hard credit checks for longer loans.
You must ask whether the BNPL service provider reports regular payment activity to credit bureaus.
