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What Is Buy Now, Pay Later? (BNPL) Guaranteed Approval

By June 23, 2022No Comments
buy now pay later

What is “Buy Now, Pay Later”?

Buy now, pay later as the name implies, allows you to make a purchase and get it right now but pay for it later, generally in a series of payments.

Though this payment plan has been around for a while, it gained much traction during the epidemic as more people turned to internet purchasing.

Most big shops offer a purchase now, pay later option, but whether you should take advantage of it depends on the plan and your financial condition.

What does BNPL mean?

A buy now, pay later loan, sometimes known as a BNPL loan, is a sort of installment loan. It will divide the total cost of your purchase into several equal payments, the first of which will be due when you check out. Your debit or credit card will be charged the outstanding balance of your transaction periodically until the whole amount has been paid off.

When you purchase online, you’ll frequently find BNPL payment plans, many of which are available in shops.

BNPL is also available for travel and health care.

How does the buy-now-pay-later scheme work?

At checkout, you’ll have an option to split up your entire purchase and pay a lesser sum now rather than the whole balance.

If interested, fill out a quick application on the checkout page. Your name, address, date, phone number, and Social Security number may be requested. You’ll choose a method of payment. The BNPL provider may then do a soft credit check, which will not affect your credit score, and accept your application in seconds.

Approval standards vary. However, you may be qualified even if you have low or no credit.

Your plan will differ depending on the supplier, but many offer a “pay-in-four” model, which breaks your purchase into four equal payments, each due two weeks apart, with the first payment due right away.

For example, if your entire order is $300, you’ll pay $75 at checkout and then have three $75 installments due two weeks apart. You’ll be able to pay off your purchase in six weeks if you make all your payments on schedule.

While a pay-in-four plan usually does not charge interest, other BNPL programs might charge up to a 30% annual rate. Depending on the firm, late penalties vary from $5 to $10 and are occasionally limited to 25% of the order amount.

Is it a good idea to purchase now and pay later?

There are various factors to consider when considering whether or not to use a BNPL payment plan.

According to Oak Park Financial, use BNPL solely for required costs, such as a mattress for your apartment or a computer for school. Even though the plan seems straightforward and low-cost, you’re still taking on debt, and going into debt for a non-essential item is seldom a wise decision.

You could also opt for a BNPL plan with no or low interest. This will make it simpler for you to repay the loan by lowering your monthly payments.

Avoid purchasing now; pay later if you’re having trouble paying your expenses or building emergency savings. It’s simple to overspend using BNPL because of its ease. If this occurs, you may be charged substantial late fees or sent to collections, negatively impacting your credit score.

Is it a brilliant idea to pay for online shopping using a BNPL app?

BNPL applications, on the whole, provide fantastic discounts. They’ve created a flexible and handy method to pay for online purchases.

What are the Benefits of BNPL Apps

  • No hard credit check: When you establish an account with BNPL, you won’t be subjected to a hard credit check in most cases, but not all. It’s a good idea to keep the number of new queries on your credit report to a minimum since too many might hurt your credit score. Some BNPL applications make a soft draw on your credit (which does not affect your score) as part of the approval process, but they’re usually more straightforward to get than a credit card.
  • Interest-free periods: BNPL might be a fantastic value if you take advantage of an interest-free offer and pay off your balance on time. You’ll be able to get your buy right away and pay for it over time without incurring any interest charges.
  • Effortless and convenient: The benefits of using BNPL applications are apparent. They don’t need any additional applications or wait for durations. Many online merchants have built-in payment choices, so it’s nearly as simple as inputting your credit card information.

Apps from the BNPL have certain drawbacks.

  • Late costs: You’ll almost certainly be charged late fees if you fail to make a payment or don’t have enough cash in your connected bank account. Many of these costs are acceptable flat-rate fees similar to those charged by credit cards, but they may mount up over time, so paying on time is the best way to prevent further charges. Deferred interest promotions on BNPL applications should also be avoided. If you don’t pay off the sum in full before the promotional time expires, you’ll be charged interest from the initial purchase date, which may be rather costly.
  • High-interest rates: BNPL applications often provide interest-free loans, but only for a short period. Some BNPL applications may start charging interest if you do not make payments according to the arrangement or if you cannot pay off the purchase in full before the interest-free term expires. BNPL applications’ average interest rates might be significantly higher than credit card interest rates.
  • Small credit limits: Some BNPL applications are designed for purchases of a few hundred dollars, while others may reach several thousand dollars. If you have strong credit and a steady income, you’ll be able to receive a credit card with a greater credit limit. However, putting large purchases on a credit card isn’t a good idea in the first place since you’ll pay high-interest rates and end yourself in debt for years.

You won’t be able to establish credit using BNPL applications since you won’t be able to gain recognition for making on-time payments. Because your payments aren’t recorded to the credit agencies in most situations, you won’t be able to create a good credit history using these apps as you would with a credit card.

The most widely used BNPL applications and how they function

PayPal Credit (previously Bill Me Later), Afterpay, Affirm, Klarna, and FuturePay are the most regularly used BNPL applications among respondents in the United States, according to The Oak Park Financial’s BNPL research. Here’s how they all function.

PayPal Credit / Bill Me Later

Because you may use PayPal’s credit service anyplace that takes PayPal, most major online businesses accept this BNPL. This is a credit line, similar to a credit card you may use again.

The continuing APR is a high 23.99 percent (correct as of 04/01/2020), but if you pay off your purchases in full within six months, you won’t pay any interest. You’ll be in for a pricey surprise if you don’t.

Unlike 0% intro APR credit cards that waive interest for a certain period, PayPal Credit has deferred interest. If you don’t pay your bill in full by the end of the six months, you’ll be charged interest on the whole amount, going back to the initial purchase date — even if you just owe a few dollars. You’d only pay interest on the remaining debt if you had a credit card with a 0% intro APR.


Afterpay allows you to spread your payments interest-free over three or four months. When you pay using Afterpay, you’ll see the payment arrangement, which usually comprises a one-time deposit followed by two-weekly payments.

Even if you don’t make your payments on time, you won’t be charged any interest with this BNPL app. If you skip a payment, you may be charged late fees, which may harm your credit. If you don’t pay, Afterpay might charge your connected card the entire amount outstanding.


Affirm provides personal loans with a quick decision to fund internet purchases. Payment arrangements vary, but Affirm’s examples stretch payments out over six, twelve, or eighteen months and incur a 15 percent APR.

Affirm’s actual APR, depending on your creditworthiness, may be as high as 30%. Before you agree to a payment plan, you will always be shown this figure. Although Affirm does not provide interest-free financing, you may be able to qualify for a rate that is lower than that of a credit card. It doesn’t impose late fees either. Making on-time payments on Affirm loans might help you improve credit, but defaulting on them can hurt it.


Klarna divides the cost of your purchase into four interest-free payments, which are paid every two weeks. The first payment will be deducted from your account at the time of sale. This program operates in the same way as Afterpay does. If you stick to the payment plan, you won’t have to pay any fees or interest.

You may be charged a late fee or a returned payment if you miss a payment or don’t have enough cash in your connected account. If you miss a payment, Klarna might automatically charge the entire amount to your card and terminate your account. Your credit may be harmed as a result of this.


FuturePay is a revolving credit card that may be used to pay for purchases made over the internet. You may put online purchases on your FuturePay “tab” and pay them off at the end of the month or carry a part of your balance over to the next month.

You’ll be charged a flat-rate financing cost of $1.50 per month for every $50 you owe if you carry a balance. If you opt to take a load, you must still make your minimum monthly payments, which start at $25, and if you miss them, you may be charged late penalties, just like with a credit card.

Various Forms of BNPL Loans

BNPL Loans are divided into two categories:

  • Loans with no interest. Instead of the customer paying interest on the loan, the retailer charges the third-party lending organization with these sorts of loans.
  • Interest-bearing loans. These on-the-spot loans allow the customer to make a purchase immediately but at a rate equivalent to a credit card.

In most cases, both loans will include a specific time frame within which the loan must be repaid in full. For example, if the item you’re interested in provides a no-interest four-part installment plan on a $1,000 purchase, you’ll make equal payments of $250 each month for four months. You may be liable to fines and other costs if you do not make all payments on time each month. Furthermore, if the BNPL came with a 0% interest offer and you’re late or miss a payment, you may be liable to deferred interest charges, which will be applied retrospectively to the whole debt if you’re late or skip a price.

Third-Party BNPL Offers vs. Credit Card BNPL Offers

Credit card issuers’ versions of BNPL vary from third-party point-of-sale financing. They aren’t available until after you’ve made purchases. They will display as an option on your bill for qualified transactions. Furthermore, they have a monthly payment added to your installment plan.

Some people may find these offerings even handier than a third-party corporate loan since they simply need you to determine if you want to divide payments using a line of credit you already have after making the purchase. You’ll also get points if you make the transaction using a rewards credit card.


Plans that allow you to buy now and pay later might be an excellent way to stretch out the cost of significant purchase. However, before you sign on the dotted line, be sure you understand all of the charges associated. Also, be sure you’ll be able to repay the loan on time to prevent paying interest and late penalties.

Luke Pitt