How Does Buy Now, Pay Later Work?

How Does Buy Now, Pay Later Work?

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Everyone has something on their wish lists that they are thinking of buying soon, or even now, but their pockets aren’t allowing it. But no need to stress over that and buy it fearlessly because of YOLO (you only live once). What if you get what you desire now and pay for that later?

Yes, this thing exists, and it’s called buy now pay later, which is self-explanatory, meaning buying things now and paying for them later.

Doesn’t it seem exciting? Yes, it is. Many big brands are switching to it because it is way more convenient for their customers, and they get their desired thing and don’t even have to pay extra for anything.

So, How Does It Work?

The company you are registered for the buy now pay later scheme will pay on your behalf for the online purchase that you are making.

Once that company pays on your behalf, they expect you to pay in return in installments in a stipulated time set according to your wish. There is no interest to be paid in this scheme, compared to personal loans, where you pay a hefty amount of interest.

You can choose to pay for a lump sum amount or Equated Monthly Installments (EMIs). And you need to repay the company within that stipulated amount of time, which is chosen by you only.

If you fail, you will be liable to pay interest to that particular company. Remember, this can badly affect your credit score.

But you need to be aware of the sites/company you are opting for this option from, there may be some cryptic terms and conditions, or they may expect you to pay interest, etc.

So, make your decision accordingly, and trust only genuine sites for this.

Advantages Of Buy Now, Pay Later

There are a lot of advantages of this scheme; some of these include:

  1. Buy now, pay later is a simple and online process and doesn’t require you to watch youtube videos on how to do it.
  2. It increases the product’s affordability; one may not even think of buying a product if one were to make the full payment.
  3. The repayment tenure, or the number of installments, is in your hand only. Most companies give 3, 6, or 12 installment options, which is up to you.
  4. You are eligible for the no-cost EMI option as well.
  5. Buy now, pay later is a very safe and secure method for any transaction of yours.
  6. You do not need a high credit score to qualify for this scheme.

Disadvantages Of Buy Now, Pay Later

  • Late charges may apply if you forget to make a payment or your linked bank account is insufficiently funded. The best way to prevent additional fees is to pay on time. Although many flat-rate fees are reasonable and comparable to those imposed by credit cards, they can add up over time.
  • When you don’t repay in the stipulated time, you are liable to be charged interest by the company, and those interest rates are quite high.
  • You are eligible for any rewards or cash backs that you would be if you were to make the payment yourself.
  • The payments are a bit hard to track, at times.

Does Buying Now And Paying Later Affect My Credit Score?

Not if you complete the repayment in the stipulated amount of time, your credit score won’t be impacted. Moreover, if you pay on time, there is a good chance that your credit score will be improved. So, worry not if you are paying in the stipulated time.

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