There is always a cost, regardless of when or how you make the purchase.

You're sipping your favorite wine late at night while looking at designer clothes online. A cool pair of goggles suddenly catches your eye, and you can't seem to let them go. As only a few pairs are left, you cannot afford to make a timely purchase because you haven't got time to save.

 Is there something you do? There's no doubt you use the Buy now, pay later plan!

A convenience like buy now and pay later can quickly become a nightmare if handled incorrectly. Paying late fees and missing payments are common traps. Consumer protections are lacking with BNPL purchases, making returns a hassle even if you never miss a payment.

At BlackBrook Case , we do not use BNPL even though it may financially good for us because we believe its bad for the whole economy in the long term.

What is Buy now pay later (BNPL):

Will you figure out what buy now, pay later means? You can find the answer here.

"Buy now, pay later" (BNPL) refers to a financing plan that divides the total cost of a purchase into manageable monthly payments. In this system, the customer pays a portion of the total sale up front and then pays off the rest with interest-free installments.

Customers purchase the product of their choice through credit on an installment basis at the point of sale under the arrangement between the seller and the purchaser. A merchant's terms may include this payment, which will not be included on the customer's credit card bill.

Furthermore, the next statement also includes the payment option targeted at young millennials and families.

This system creates debt and makes it easier for people to spend more money than they currently have, simply borrowing money from future.

Buy now and pay later in eCommerce: how does it work?

Using a buy now, pay later service works like this:

1. You can choose to pay later during the online checkout process.
2. Buying now and paying later pulls your credit to ensure you're approved.
3. A small down payment (usually 25%) will be required after you get approved (usually within seconds).
4. Once the item's paid off, you keep making payments in equal amounts. 

Payments are typically made every two weeks until the item is paid off on a buy now, pay later plan.

Why is buying now pay later bad for people?

As someone who have experienced installment payments ( up to 24 months) for almost everything that is sold with a credit card , which is actually financed by the credit cards and seen the effects on the economy in the long run, we believe even though this may be good for merchants, its not good for customers or the whole economy. Spending money that you do not have and borrowing from future in order to increase the order value will only strain budgets and creates problems along the way. Our rule of thumb is don't spend the money you do not have.

Customers can get into bad debt with BPNL. When people pay through BPNL, they think they're just paying a small amount every month but spend more than they can afford. The "small installment" quickly turns into numerous small installments, ultimately adding up to hundreds of thousands of dollars.

Here are some reasons why buy now pay later is bad for customers. 

1.    Overdue payment fees

If you're late with your payment, will there be any penalties? Yes, that's right!

If you follow the rules properly, buying now and paying later won't cost you anything. If you fail to make a payment as agreed, you run the danger of being hit with additional charges.

Providers of BNPL services earn a lot of revenue from late payment fees. You're usually supposed to pay 24 hours after your credit card declines if you don't have enough money. Otherwise, late fees will apply.

2.    Payments must be made on time:

In contrast to credit cards or personal loans, you can't pick the day you make your BNPL payment.

If you have BNPL providers repaying your debt, you might prefer it be done on a payday or when you have money in your bank account.

If you don't have a choice about when to pay, you could get into more credit card debt, or your BNPL payment wouldn't go through, and you owe them for the late fees. It's possible that the final price will end up being higher than you anticipated.

3.    Hard to get a loan:

Your credit rating could suffer if you don't pay your BNPL payments. Mortgages, car loans, and credit cards will be harder to get if you have a bad credit score.

Because you're borrowing money, lenders, like banks, see BNPL as a line of credit even though you don't go through a credit check.

Your BNPL purchases, other debts, expenses, and overall risk profile will be considered when you apply for a home loan.

4.    It's money you don't have:

Buying something without paying would have seemed a little strange to previous generations. BNPL schemes are just like that.

Buying unnecessary items with credit is unnecessary, but you can live a fulfilling life without it. One issue that comes to mind is people spending money they don't have on unnecessary items for individuals they don't like.

5.    Financial discipline is the key:

It would be best to consider your financial situation and spending habits when deciding whether to use BNPL arrangements.

The BNPL platform can be a good tool to handle your finances by spreading out your payments over time; if you use it for spending, you will do it anyway.

In other words, they could make things worse if you're already having trouble making repayments and a problem spender.

You can improve your financial management by understanding your attitude towards money.

6.    Shop impulsively:

What do you think? Online shopping is one of your favorite things to do, right?

In the absence of enough financial discipline, buy now, pay later can lead to impulsive spending. It gives the illusion to people that they can buy anything and pay it back within 30 days to 36 months.

A large amount of debt could result from this. You can spend much on health and beauty products, electrical devices, and clothes when buying the cheapest ones.

7.    Interest rates are high:

Many BNPL companies let you apply for credit at checkout. There's a high annual percentage rate on these financing options.

Why we do not use Buy Now, Pay Later?

It could be a great feature for e-commerce sites like ours to utilize "Buy now and pay later" since more customers can purchase more items instantly. Nevertheless, we do strongly believe it's bad and do not use it on BlackBrook Case even though it ultimately means a lower order value for us. 

We believe even though this may be good for merchants, it's not good for customers or the economy as a whole. Spending money that you do not have and borrowing against future income in order to increase the order value will only strain budgets and creates problems along the way. Our rule of thumb is don't spend money you don't have.