The digital medium has offered us an alternative to almost everything, especially payments, transactions, and more. No doubt, cash, checks, and demand drafts have been replaced by credit cards, debit cards, Net Banking, payment apps, digital wallets, and more. Most of our finance-related documentation work has also been made almost negligible in the drive to go paperless. You can now apply for loans online, invest in insurance and shares, gold and cryptocurrencies, and more – all online. The newest addition to this long list is credit facilities or credit cards. A new concept has been introduced called the ‘Buy Now, Pay Later.
What is BNPL?
The concept is quite simple, actually. When you need to pay, you take money from the BNPL provider and pay the merchant. You then repay the BNPL provider within the given time frame, ranging from weeks to months.
What is the advantage of BNPL?
It is just like using a credit card. You use the money now – be it for shopping, eating food, booking a flight ticket, or buying groceries and paying up later. The advantage is that you do not have to pay it off instantly. You get time to settle the bill.
- The best part is that BNPL is interest-free. Therefore, there is no fee or extra charge that you pay.
- You are completely free to use the services of Buy Now Pay Later anytime, anywhere.
- If you fail to pay up on time, there could be late repayment fees. But, that is completely fair and justified. Remember, if you make your payments on time, there will never be an issue. So, there is no need to pay any extra amount.
- It helps you spread out the amount towards the expense instead of bearing it all on at one time.
- Another notable thing about BNPL is that the repayment plan is usually short. It does not stretch on and on. Yes, it means that you must have a plan ready for repayment when you choose to borrow on this scheme. Since it is short-term, you are focused on repaying the complete amount so that you can avail of the BNPL facility again in the future.
- The BNPL service provider will usually send you a digital reminder, either SMS or email, or even notify you through the app.
- BNPL can be used at any kind of retailer – online or offline.
- BNPL providers offer different credit limits; therefore, research and find out the details if you are keen to try out this facility.
- One of the most-loved things is that most BNPL providers will not go in for a very detailed credit history check. Unlike credit cards or loans, the provider will always carry out a thorough check of your credit history and scores before offering credit.
- Finally, remember by using the BNPL facility, you get the chance to improve your credit score. It is all linked with your PAN and Aadhar – hence, if your credit score is low, you can avail of Buy Now Pay Later, make timely repayments and watch your CIBIL score improve.
What factors to consider when downloading a BNPL app?
Choosing the right Buy Now Pay Later app is crucial. You need an application that is easy to use and serves to be economical. Here are some features to look out for when choosing the app:
Choose an app that has a credible name. Please read about the BNPL provider to understand their trustworthiness.
- You should go in for an app that offers flexibility in the repayment schedule.
- The app should offer your services online and offline. It means that the BNPL provider should be associated with retailers in the virtual and the physical world. The bigger the retailer association network, the better it is for you.
- Choose an app that does not charge late fees for bill payment.
- The credit amount is also a crucial factor. Of course, it is tempting to choose an app that offers the highest credit facility. But, you need to check your repayment plan well beforehand.
- Most apps offer bi-monthly repayment schedules. It is best to first find the details before downloading the app.
- Ensure that the app has a notification system so that there are reminders on due dates and pending payments.
- The credit approval process should not be long drawn.
You can check out apps like MobiKwik, Paytm, LazyPay etc. to avail Buy Now, Pay Later.