Christmas is one of the most celebrated holidays. Many people spend the whole year planning how they are going to celebrate it. However, no matter how well you plan, life can happen so that you find yourself with no money to spend on Christmas presents.
This is where BNPL (buy now pay later) financing comes in. It offers buyers a convenient alternative to obtain a loan until payday. Let’s see how you can use this option to buy amazing gifts for your loved one.
What is Buy Now Pay Later?
Sometimes referred to as an installment loan, this is a financing option that allows individuals to make purchases and pay them off at a later date. Most of the time, this arrangement is generally uninteresting which is why it is becoming a popular option, especially among online shoppers.
However, this funding is not the same in all companies. Therefore, individuals are subject to different conditions, depending on the company. But the lines of operation are the same;
You purchase your item (s) from a retailer then choose buy now pay later during checkout. If your request is approved, it usually only takes a few seconds, you make a deposit which is mainly 25% of the total purchase cost.
Then you pay the balance in installments, usually interest-free, by wire transfer, or by check. Or you can allow payments to be deducted from your credit or debit card or bank account.
How can this benefit me?
Buying Now Paying Later could help you avoid credit card interest this holiday season. As such, you can save money, although you will still pay for the items over time. The best thing about this finance is that you get immediate possession of the item and pay it off on time, most of the time 3-4 months.
So what are the benefits of using Buy Now Pay Later during Christmas time? Well, the top three reasons to consider this financing are savings, flexibility, and convenience. Most of the time, buy now and pay the interest-free fees later. This means that you can avoid the interest on credit cards and other long term loans. In fact, most debit users use BNPL to avoid debit card interest.
Plus, BNPL offers flexibility since you don’t have to feel like you have to pay for a gift right away. As you keep some of your money, it gives you more purchasing power, especially on larger items like travel or furniture.
Again, BNPL gives you some convenience. Note that you buy your products from BNPL retailers or by using the BNPL app. Hence, the process is straightforward and is a smart alternative to using credit cards.
Will BNPL Affect Your Credit Score?
Well, it depends on the terms and conditions that are offered to you. If the financing solution needs to check your credit history before deciding to approve your application, it can affect your credit score. However, some solutions do not affect your current credit rating. Instead, they focus on building points using their structure. Using these solutions can increase the amount you can borrow with frequent use.
Things to consider when using BNPL this Christmas
Ideally, you should only sign up for BNPL when you are sure you can pay the money. But most people end up spending more with this funding than they would by paying the cost up front.
BNPL encourages customers to shop more, which benefits retailers. This is because people need to make a deposit for their item in advance. The rest of the payments are spread over the agreed period.
Therefore, it is easy to be tempted to spend more on products than you are sure you can afford. If you need a BNPL to fund your loved one’s Christmas present, make sure you have a budget, know when the payment is due, and whether you can afford the loan by then. end of the given period.
- Make sure your card will work with BNPL service
If any payments are deducted from your debit / credit card or checking account, ensure that transactions to the BNPL program are successful. Note that some credit cards do not work with some BNPL programs. So, it is wise to confirm. Otherwise, your purchase may be delayed.
- Understand the return policy
Know the retailer’s policy and that of the BNPL service you use regarding the return of products before purchasing. Note that some programs may still require that you continue to pay the loan even though you have returned the product (s).
Returns and refunds affect your remaining payments in different ways. So be sure to read the documents relating to the terms of your loan before signing a contract.
Buy Now Is Paying Later Right For You?
Many BNPL offers are available during this Christmas period. However, before you jump in quickly, make sure you set a budget and buy only the products you want and need.