BNPL, i.e., “Buy Now, Pay Later” scheme, has become quite popular among the youth these days. While shopping online, you can buy goods in just a few clicks and later pay in easy monthly installments, without any interest. It sounds great, but there is a trap hidden behind it.

Many times, there are many hidden charges, late fees, and new problems related to credit in this scheme, which many people do not realize in the beginning. Gradually, it becomes a habit, and if the payment is not made on time, then this facility can become a big financial burden. That is, in the beginning, it seems easy and beneficial to you, but later it can be heavy on your pocket.

Hidden charges

Even though the companies providing BNPL (Buy Now, Pay Later) service do not charge any interest on short-term payments, if even a single installment is missed, then you may have to bear many extra expenses like late fees, processing fees, and penalty charges. These charges, which seem small in the beginning, can later become a big burden, which people often realize late. Sometimes, a late fee of ₹500 to ₹1,000 is charged for a late installment. Apart from this, some platforms also add GST in the name of service charge or convenience fee, which further increases your total amount.

Your credit score may get a shock.

If you repeatedly use the BNPL (Buy Now, Pay Later) service, it can have a bad effect on your credit history. Many platforms send your late payment or default information directly to the credit bureau, which can cause your credit score to fall.

Even if you are making payments on time, but use multiple BNPL offers simultaneously, banks and loan companies may feel that you are in great need of money. This may cause problems in getting a personal loan, a home loan, or a credit card in the future.

The habit of overspending and borrowing becomes a problem.
When there is no need to pay immediately, people often start shopping without thinking. This easy method of BNPL (Buy Now, Pay Later) motivates people to buy electronic goods, clothes, or services that they do not need or are out of their budget. Initially, everything seems cheap and easy, but gradually, the same person starts using multiple BNPL loans. When installments have to be paid from different platforms every month, the monthly budget gets messed up.

Transparency is lacking
Compared to systems with strict rules like credit cards, BNPL platforms still come under incomplete regulation. This means that customers get very little protection. Their terms and conditions are often so different that people are not able to understand the real things easily after reading them. The problem increases further in situations like refund or cancellation of an order, especially when there is a dispute between the customer and the shopkeeper. Many times, even after returning the product, the EMI continues to be deducted because the information between the BNPL company and the shopkeeper is not transmitted on time. Due to this, the customer has to suffer, and they have to pay the EMI for the thing that they have returned.

Be sure to read the terms every time before clicking on 'Pay Later'. If BNPL platforms are used correctly, it can be helpful. But if you ignore it, this habit can take a toll on your budget and you can get trapped in unwanted debt.

Disclaimer: This content has been sourced and edited from News 18 hindi. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.