The dark side of Buy Now, Pay Later
BNPL promises you convenience, but if you’re not judicious, it will hurt your ability to borrow for more urgent needs.
Why read this story?
Editor's note: Is there anything quite as seductive as the phrase “buy now, pay later”? Ever since online shopping became a pandemic-induced pastime, BNPL companies in India have multiplied, as have its users. And while credit—as a tool—is important for our collective financial growth, the rise of BNPL, especially among the millennial and Gen-Z demographics, indicates that there’s very little awareness about the dangers of casual debt. And that’s what today’s newsletter is about. BNPL may promise you convenience—but at what cost? Red flag 1: The easier the process, the bigger the catch Perhaps the biggest red flag for BNPL is how easy it is to get approvals for a BNPL credit limit. The bulk of BNPL providers do not check credit scores and instead rely on the user providing them data about their salary and employment. I registered for an account with one of the more popular BNPL providers last week. The process took me about 5 minutes. I had to give my PAN card number and my salary/employment details (I gave them an arbit post-tax salary figure of Rs 1 …
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