Every buy-now-pay-later programs are not the same, each has its terms and conditions and comes with different credit checks. Some programs conduct a soft credit check while some carry out a hard credit check which can temporarily affect your credit score.
It is quite important to consider the return policies on a buy now pay later program because you might likely return a purchase that you have made to the merchant but won’t be able to cancel the BNPL agreement until you have substantially proven to have canceled the transaction.
Affirm:
Affirm is currently the best buy now pay later program out there.
Pros like; you won’t be charged for any interest as the case may be, you won’t be charged when you make a late payment, you can make your purchase online or in-store, and you can choose your payment schedule by yourself for your convenience, you can purchase up to $17,000.
Cons like; you don’t use a physical credit card, most transactions charge interest and most transactions require a credit check for the purchase to be made.
Many retailers offer to Affirm as a payment option and the company has financed over 17 million purchases since its inception in 2012.
You can also access a longer repayment period depending on the situation.
Other great buy-now-pay-later options:
- Sezzle: Sezzle has set itself apart from another buy now pay later programs due to its flexible payment schedule. It allows the users to put up extra two weeks before the due date of their repayment. It doesn’t charge interest and the first reschedule per order without incurring a fee.
On the downside of this app, you are required to make a 25% down payment upon purchase, you will be charged fees for additional reschedules.
This company is based in the U.S, Canada, Germany, and India. It currently has over 3,2 million active customers and hundreds of thousands of active merchants.
- Afterpay: this is another buy now pay later option that you should consider. This is the best buy now pay later option for students because it ensures that its customers can afford their purchases by splitting the repayment schedule into four equal installments to be made over time.
It sends you reminders so you don’t miss a payment and doesn’t charge a fee when you pay on time. Its credit limit starts at $500, a smart credit limit to help you stay under budget.
However, Afterpay charges for late payments as high as 25% of the order amount. Also, for every purchase you want to make with Afterpay, it has to approve and might decline your order as need be.
Afterpay company operates in New Zealand, U.K, E.U., U.S., and Canada and was founded in 2014.
It currently has over 16 million customers and it works with over a hundred thousand brands to increase the shopping choices of its customers.
- Splitit: when it comes to no credit checks, Splitit is the best option so far. This program offers you the benefits of buying now and paying later without taking you through the rigorous process of credit checks. It uses your existing credit card limits and has you not to worry about getting a new credit card approved.
It also gives you the luxury of not passing through the process of applications, credit checks, and registration and uses your existing cards like visa, MasterCard, Unionpay, or discover.
On the downside, you must have a credit card with available credits and it is not available with Amex cards. It also does not build credit beyond normal credit card limits and though, Splitit does not charge interest, interest can still be charged by your credit card company.
Splitit is a New York City-based company and was founded in 2012.
- What are the cons of buy-now-pay-later?
Just as borrowing has its consequences, buy now pay later method of payment has similar and additional consequences to it.
Buy now pay later method of payment encourages impulse buying and increases your spending habits to the detriment of your income. The unregulated aspect of buy now pay later and the different policies used by the companies that provide this service makes it harder for the users to stay on track without getting their account suspended or terminated. The risk of late repayment can be terrible no matter what your reason for the late fee could be. You might incur interest over the long run or at worst have your card reported and the credit score affected. Often, Buy now pay later programs don’t offer you the choice to choose your repayment schedule yourself. This can be disadvantageous to you because you know better than anyone when you will be having funds on your credit card. If in the end, you later get caught up with a negative review which eventually damaged your credit rating. You won’t be able to secure any kind of loan, mortgage, or even get another credit card in the future.
- Should I consider buy-now-pay-later?
Yes if you don’t have a good spending habit, if you are sure you can repay on time or in the best case, have the full repayment made at once.
No, if you have a bad spending habit and if you are not sure of the stability of your income. Instead of using the buy-now-pay-later option, you should consider saving up money daily, weekly, or monthly in your savings account till it is enough to get whatever item you wish to purchase.
