Buy now and pay later, the pros and cons.

What is a buy now, pay later plan? 

You may have noticed when making recent online purchases, some retailers such as Amazon, Wayfair, etc., now have an option called “buy now, pay later!” This is an option to instantly purchase your items on credit provided through a retailer financing plan (most commonly paybright, afterpay, Klarna), and pay later through a set amount of payments. While this has been around for some time, the concept is still new to some people, and as with most financing options, there are pros and cons. 

But how do the plans work?

When “checking out” with your items, and you are prompted for your payment information, the majority of the retailers will present their options, whether it's “4 interest free payments of $xxx every two weeks” or “as low as $xxx/month”, etc. You’re able to select the option that best suits your repayment ability. You then have the ability to choose the payment method best suited for you, whether it’s pre-authorized debit, pre-authorized credit, and more. 

So, what are the pros and cons?

Pros:
- You are able to purchase items immediately that you may otherwise have been unable to afford and spread the payments over a set amount of time to best fit your budget.
- The ability to take advantage of a low interest rate as opposed to using your credit card that most likely has a higher interest rate.
- Ability to obtain credit most times without a credit check.  

Cons:
- You need to ensure you have the ability to make the payments on time that were outlined within the plan you selected.
- It could lead to over borrowing by taking on unnecessary debt.
- Encourages impulsive shopping and spending beyond your means.
- If you are in need of a loan, it could affect your ability to get approved due to a higher debt service ratio. 
- If payments are missed, you could potentially be charged late fees, or be prevented from making any further purchases using that financer. 
- Late or missed payments could negatively impact your credit score. 

If you have found yourself stuck in the vicious cycle of buy now, pay later plans, and/or have competing priorities with other debts, it might be a good time to consider looking at your options. 

If you are looking for advice, or a second opinion about your debt, it does not cost anything to talk about your options. Every financial situation is unique and viable options can differ from person to person.  A conversation free of judgment, is the first step to determine options for debt that make sense for you.  For a free consultation, please call or text (506) 645-1814 or email jaime@tackledebt.ca; or visit www.tackledebt.ca.