- Date : 25/03/2022
- Read: 2 mins
Until a few years ago, Buy Now and Pay Later meant using your credit card to make a purchase and paying later. However, for the past few years we've seen e-commerce companies, banks, and fintech companies offer a scheme called Buy Now, Pay Later (BNPL).
What is BNPL?
BNPL is a form of micro-loan which is instant and allows pocket-friendly buyers to purchase initially and then pay later at a subsequent date without any interest. The loan has a prescribed limit, and the purchases are not very expensive. The loan has to be paid between 14 and 90 days and is an unsecured loan form. It depends on the loan terms whether the product repayment will include any interest or not. However, it is interest-free generally. The credit providers understand their customers' actions by using state-of-the-art technology and their repayment histories.
This permits credit issuers to determine whether or not the borrower is creditworthy. The loan is disbursed within minutes digitally. The credit providers may also decrease or even increase the credit limit depending on the customer's buying behaviour, past repayment history, and some other things.
Benefits of BNPL:
There are several benefits of BNPL. These are:
- Instant credit access
- Tenure for repayment is flexible
- Secure and safe digital transaction
- Interest-free EMI
- Allows clients to buy without having to pay right away
Difference between BNPL and Personal Loan
Difference between BNPL and Credit Card
What you should do is entirely dependent on your qualifications, needs, and payback history. If you are unable to repay, you will be required to pay a hefty penalty. In a nutshell, for small-ticket purchases, you can use BNPL or credit cards.
However, if you must choose between BNPL and a credit card, you should choose the credit card due to its numerous advantages and benefits.