Buy Now, Pay Later. It sounds like the dream, right? You can purchase that new iPhone that just seemed too expensive to splurge on or you can order some nice new designer clothes without having to worry about all the costs straight up. When it started out, BNPL was essentially a modern lay-by service for the online world. It was designed for shoppers to purchase items such as toys, clothes, tech, supplements etc and pay the amount back in fortnightly installments. It’s a great idea and has allowed many people to slowly pay back on things they wouldn’t normally be able to afford in one purchase.
Unfortunately, as more businesses started embracing services like Afterpay, individual debt has begun to pile up. It was no longer just for online services; your local dentist, mechanic, even landlords began accepting BNPL, that’s right, allowing renters to pay in this format. This has led to a reliance on the system and has left many people overwhelmed with debt.
If a customer misses a payment, these services will then add additional late fees which will continue being added to the debt until the amount is paid in full. What many consumers are failing to understand is that these services, just like any loan, are putting them into debt that they simply can’t pay back. And, unlike other types of loan services, BNLP does not provide special circumstances to those suffering hardships.
BNLP research data shows that people are now relying on these services to pay for essential items including food, medication and even rent. Now, the blame doesn’t fall on these services but the abuse or overuse of them that has many of its customers drowning. Many of these industries can have huge costs and the bigger the fee’s, the higher the fortnightly payments are. As Christmas is right around the corner, more and more people are expected to pay for gifts with these services. Just recently on the Black Friday and Cyber Monday sales, an estimated 5.5 billion dollars was spent by Australian consumers.
If you are using these services, be careful and make sure you’re able to pay your debt back on time. BNPL doesn’t affect your credit score if used properly, but if you’re one of those people finding themselves in debt with these services, get on top of it as soon as possible.
The key to remember is not to live outside your means. You need to be smart with your money and your purchases. Instead of borrowing money that you can’t afford to pay back, look at ways to boost your income.
Shaun Fox
