Buying something that you don’t have the money to pay for immediately can be risky, but it doesn’t always have to be that way!
Buy now pay later arrangements can be great if you’re in the market to buy something expensive but don’t have the cash available right away. If you’re thinking about making a large purchase like this and aren’t sure if buy now pay later is the right option for you, here are some things to consider before committing to any particular program. These details will help you weigh the pros and cons of buy now pay later so that you can make an informed decision as to whether or not it makes sense for your personal finances.
Understanding How Buy Now Pay Later Works
Rather than paying for your purchase upfront, you can choose to make payments over an agreed period of time. This is often referred to as a buy now pay later arrangement. You’ll be able to make interest-free payments over time1. When you apply for a buy now pay later plan, your request is usually approved by a third-party company. These companies process and track all of your payments. Once you’re approved, purchases made through participating retailers using your account number will be paid in installments as scheduled. Many plans will allow you to pay the full amount at any time if you have the cash available.
When Should I Use It?
It’s a good idea to use buy now pay later if you’re in a pinch and need something right away, but you don’t have enough money available. Buy now pay later is a great option for large purchases or holiday shopping. You should be aware of your cash flow over the next few months to ensure you will be able to make the payments.
If you fall behind or miss payments, you may fall into a tricky financial situation.
The benefits of buy now pay later
The main benefit of buy now pay later is that it allows consumers to make purchases and spread out payments over several months or years. Without a program like buy now pay later, you’d have to take out a loan from a bank or credit card company, which can be difficult for some people. With a buy now pay later program, you don’t need amazing credit 2 ! Because of its flexibility, it’s an attractive option for many consumers who want access to items they wouldn’t otherwise be able to afford at the moment. Some companies even offer programs where you get free shipping when buying your item through their site; it seems too good to be true!
Is there risk involved with using buy now pay later plans?
Buy now pay later plans are great ways to purchase products you need and not have your personal finances be adversely affected. Before you make a purchase, though, it’s important to understand what all of your options are and whether or not there is risk involved with using buy now pay later plans. Look into late fees, interest rates, and other hidden fees! The risks will emerge if you fail to make the agreed payments. If you begin missing payments, aside from fees and interest rates, your credit score may suffer3.
What type of products can I purchase using buy now pay later plans?
Most buy now pay later plans make sense for big-ticket items like electronics and appliances. Many people do not have disposable income to buy new large purchases they need. Today many retailers are using buy now pay later on all types of items, so you can use the plan to purchase just about anything, at any price point! We recommend doing your research beforehand, but you may be surprised at what some stores will allow you to purchase on these programs.
If you are in a situation where your monthly cash flow is tight, buy now pay later can help you buy what you need without putting too much of a dent in your savings. The key is only using it when necessary, and planning out purchases so they are spaced out through time. If used properly, buy now pay later can help keep your finances on track and allow you some freedom to do more with less during rough times. If that sounds appealing, take a look at available offers from retailers—you may be surprised by how many choices there are for those with a limited credit history or past financial problems. There are even options for those who’ve been turned down by traditional financing methods due to poor credit.
Work Cited:
- https://www.fool.com/the-ascent/credit-cards/how-does-buy-now-pay-later-work/
- https://www.bankrate.com/finance/credit-cards/buy-now-pay-later-credit-score/
- https://www.consumerreports.org/shopping-retail/risks-of-buy-now-pay-later-programs-a1000664957/