BNPL stands for Buy now pay later is a payment option where the individual can buy without paying from their own pocket.
Basically, the individual can sign up with the company whom offering this type of facility that makes the payment when you purchase something.
However, once the lenders pay on your behalf, you will have to repay the amount within the specified time period. The amount can be paid as a lumpsum or paid via no cost Equated Monthly Installments (EMIs).
Certain interest will be charged on your amount when you fail to pay the amount within the given repayment period and delay payment could affect your credit score wisely.
The benefits of buy now pay later are listed below:
BNPLs are short-term loans that let online and offline purchases, via apps like Phone pay, Google pay, and Paytm to make immediate payments.
It allows the customers to purchase products, and then pay for them within a specific period.
This loan requires an upfront deposit payment showing a portion, as 25% of overall purchase amount.
Then the remaining balance should be paid off in monthly installments within a few weeks or months.
In terms of cost, BNPL plans do not charge any interest, but if the consumer fails to pay the amount within a specific period, then buy now pay later providers to charge interest on it and it affects your credit history and CIBIL Score.
BNPL players of the Indian market are listed below: -
A credit card is a line of credit offered by various banks and financial service providers that allows cardholders to use the card to pay for purchases up to a specified limit. Applicants repay the borrowed amount plus interest and other applicable charges either in full or partly as per the scheduled bill date.
|It helps to increase your credit score and credit history.||Sometimes, it leads to overspending.|
|Safe and secure to use as compared to carrying cash.||Interest rates increase if payments are not made on time.|
|Offers benefits like a discount at retailers, complimentary airport lounge access, fuel discount, etc.||Applying for too many credits might damage your credits.|
If you want to increase your purchasing power while acquiring reward points, discounts, and many other benefits then credit cards are the best option.
Moreover, it helps to build your credit history and CIBIL Score over time. Whereas buy now pay later depends on offers and availability.
While you opt for BNPL, verify terms and conditions so that you can pay back the amount on time to keep away from penalties and interest charges.
|Fast and instant approval||If not used carefully can lead to overspending|
|Smooth repayment option in the form of Monthly Equated Installments||The repayment frequency is fixed by the retailer.|
|It is interest-free||It encourages you to buy things that are not pocket friendly.|
|It is not compulsory to have a credit history.||It is essential to have a good credit history to get a credit card.|
|BNPL services are offered by Fintech organizations and e-retailers.||It comes with more flexible acceptance.|
|BNPL is a low-cost pricing model.||Hidden charges are levied on credit cards.|
|Hassle-free approval||Credit card approval is slightly difficult.|
|No such benefits||You can get reward points, cashback, Airmiles on purchases.|
|Interest free duration can range up to 48 months.||A standard Interest-free period can be obtained under credit cards.|
|The applicant must pay the EMI on a scheduled date.||The borrower has the choice to pay only the minimum due amount.|
BNPL (Buy now pay later)
The future of Buy now pay later can be intense as the market is expected to reach $20.4 Billion by 2028 and more than $1 Trillion in annual GMV (Gross Merchandise Volume) by 2025.
The concept of BNPL attracts many customers to buy an item instantly.
Several banks that provide such facilities give repayment at no-cost EMIs, which in upcoming years is likely to become a Favored payment option among the youth.
Buy now pay later share providers follow the same operational model with terms and conditions being only differentiators.
Consumers of Buy now pay later frequently make purchases that they cannot afford. Low amounts can trick individuals into spending more than they actually should.
Before you finance every aspect with a BNPL loan, understand the specification of the facilities. If you have already borrowed too much money, prefer to avoid obtaining such facility anymore.
Borrowers who fall under the youngster category should keep in mind that it affects your credit history. Your future creditworthiness depends on your present financial activities.
If you use the credit limit and pay back the amount on time, your credit history and score will be enhanced.
Also read: - Business Credit Cards – All you need to know