Buy Now, Pay Later: Difference between revisions

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'''Buy Now, Pay Later (BNPL)''' is a financing option for online purchases that allows consumers to pay for items in four installments. Companies such as [[Klarna]], [[Affirm]], [[PayPal]], and [[Apple Pay]] offer Buy Now, Pay Later loans at the check-out of online retailers, advertising four low payment installments. Because the lenders generally commit soft credit checks and offer interest-free installments within a short period, BNPL is highly targeted toward those who have bad or no credit at all. It disproportionately affects vulnerable consumers, leading to major criticisms of predatory lending.

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===Ease of debt===

Many credit lenders offer soft credit checks and low interest rates to entice un-creditworthy consumers. While these practices do have some benefit, particularly for financially aware individuals seeking to improve credit, these enticements often bring in consumers who are more vulnerable. Buy Now, Pay Later lenders are especially egregious in advertising to vulnerable consumers, often advertising alongside necessary online purchases such as groceries. The lack of gatekeeping from hard credit checks and interest rates means that more consumers are accruing easily avoided debt.

Many credit lenders offer soft credit checks and low interest rates to entice un-creditworthy consumers. While these practices do have some benefit, particularly for financially aware individuals seeking to improve credit, these enticements often bring in consumers who are more vulnerable. Buy Now, Pay Later lenders are especially egregious in advertising to vulnerable consumers, often advertising alongside necessary online purchases such as groceries and even rent and utilities. The lack of gatekeeping from hard credit checks and interest rates means that more consumers are accruing easily avoided debt.

=== No safeguards ===

===No safeguards===

Credit card companies generally report to the major credit bureaus such as Experian, TransUnion, and Equifax. Without reporting consumer information, BNPL lenders avoid common safeguards like spending limits, ~~which allows~~ consumers to accrue hundreds of even thousands of dollars of debt that otherwise wouldn't have been possible.

Credit card companies generally report to the major credit bureaus such as Experian, TransUnion, and Equifax. Without reporting consumer information, BNPL lenders avoid common safeguards like spending limits, thus allowing consumers to accrue hundreds or even thousands of dollars in debt that otherwise wouldn't have been possible. This is particularly harmful because consumers tend to believe, and the lenders tend to advertise, BNPL services as a safer option compared to traditional credit cards.

==Examples==

*[https://www.affirm.com/ '''Affirm'''] ~~to pay for your groceries.~~

*[https://www.affirm.com/ '''Affirm''']

*[https://www.afterpay.com/ '''Afterpay'''] ~~to pay for gas.~~

*[https://www.afterpay.com/ '''Afterpay''']

*[https://www.klarna.com/ '''Klarna'''] ~~to pay for Doordash deliveries.~~

*[https://www.klarna.com/ '''Klarna''']

*[https://www.shopabunda.com/ '''Abunda'''] ~~to pay for clothes and household items.~~

*[https://www.shopabunda.com/ '''Abunda''']

*PayPal

*Apple Pay

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-{{Incomplete}}{{ToneWarning}}
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-{{Irrelevant}}
 '''Buy Now, Pay Later (BNPL)''' is a financing option for online purchases that allows consumers to pay for items in four installments. Companies such as [[Klarna]], [[Affirm]], [[PayPal]], and [[Apple Pay]] offer Buy Now, Pay Later loans at the check-out of online retailers, advertising four low payment installments. Because the lenders generally commit soft credit checks and offer interest-free installments within a short period,  BNPL is highly targeted toward those who have bad or no credit at all. It disproportionately affects vulnerable consumers, leading to major criticisms of predatory lending.
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 ===Ease of debt===
-Many credit lenders offer soft credit checks and low interest rates to entice un-creditworthy consumers. While these practices do have some benefit, particularly for financially aware individuals seeking to improve credit, these enticements often bring in consumers who are more vulnerable. Buy Now, Pay Later lenders are especially egregious in advertising to vulnerable consumers, often advertising alongside necessary online purchases such as groceries. The lack of gatekeeping from hard credit checks and interest rates means that more consumers are accruing easily avoided debt.
+Many credit lenders offer soft credit checks and low interest rates to entice un-creditworthy consumers. While these practices do have some benefit, particularly for financially aware individuals seeking to improve credit, these enticements often bring in consumers who are more vulnerable. Buy Now, Pay Later lenders are especially egregious in advertising to vulnerable consumers, often advertising alongside necessary online purchases such as groceries and even rent and utilities. The lack of gatekeeping from hard credit checks and interest rates means that more consumers are accruing easily avoided debt.
-=== No safeguards ===
+===No safeguards===
-Credit card companies generally report to the major credit bureaus such as Experian, TransUnion, and Equifax. Without reporting consumer information, BNPL lenders avoid common safeguards like spending limits, which allows consumers to accrue hundreds of even thousands of dollars of debt that otherwise wouldn't have been possible.
+Credit card companies generally report to the major credit bureaus such as Experian, TransUnion, and Equifax. Without reporting consumer information, BNPL lenders avoid common safeguards like spending limits, thus allowing consumers to accrue hundreds or even thousands of dollars in debt that otherwise wouldn't have been possible. This is particularly harmful because consumers tend to believe, and the lenders tend to advertise, BNPL services as a safer option compared to traditional credit cards.
 ==Examples==
-*[https://www.affirm.com/ '''Affirm'''] to pay for your groceries.
+*[https://www.affirm.com/ '''Affirm''']
-*[https://www.afterpay.com/ '''Afterpay'''] to pay for gas.
+*[https://www.afterpay.com/ '''Afterpay''']
-*[https://www.klarna.com/ '''Klarna'''] to pay for Doordash deliveries.
+*[https://www.klarna.com/ '''Klarna''']
-*[https://www.shopabunda.com/ '''Abunda'''] to pay for clothes and household items.
+*[https://www.shopabunda.com/ '''Abunda''']
 *PayPal
 *Apple Pay