Posted on 09/15/2022 6:59:04 AM PDT by Oldeconomybuyer
NEW YORK (AP) — Americans have grown fond of “buy now, pay later” services, but the “pay later” part is becoming increasingly difficult for some borrowers.
Buy now, pay later loans allow users to pay for items such new sneakers, electronics, or luxury goods in installments. Companies such as Affirm, Afterpay, Klarna and PayPal have built popular financial products around these short-term loans, particularly for younger borrowers, who are fearful of never-ending credit card debt.
Now, as the industry racks up customers, delinquencies are climbing. Inflation is squeezing consumers, making it tougher to pay off debts. Some borrowers don’t budget properly, particularly if they are persuaded to take out multiple loans, while others may have been credit risks to begin with.
“You have an industry with a higher concentration of subprime borrowers in a market that hasn’t been effectively tested through (this type of economy), and you have a kind of a toxic brew of concerns,” said Michael Taiano, an analyst with Fitch Ratings, who co-wrote a report in July highlighting some of the concerns with the industry.
The most popular type of buy now, pay later loans allow for four payments over six weeks — one payment at the time of purchase and three others that borrowers often try to sync up with pay periods. Longer-term loans for bigger purchases are also available. Most of the short-term loans have no interest attached to them. Companies that do charge interest can clearly state upfront how much a borrower will pay in financial charges.
A poll by Morning Consult released this week found 15% of buy now, pay later customers are using the service for routine purchases, such as groceries and gas, a type of behavior that sounds alarm bells among financial advisors.
(Excerpt) Read more at apnews.com ...
Back in the day it was layaway - pay now, get later.
particularly for younger borrowers, who are fearful of never-ending credit card debt.
They are fearful of never ending credit card debt, but are not fearful about this other type of never ending debt???
“Buy now, pay later” = buy unimportant stuff you can’t afford.
And 15% of users are getting groceries with payment plans? Yep, America’s doing just fine, just ol’ Uncle Joe says!
When will people realize that their mortgages are exactly the same thing?
The company store credit card of slaves.
Last year I signed up for Ebay’s buy now, pay later. Only because it came with an introductory offer of a $30 discount on my next purchase. So I bought a 17.3” HP FHD IPS laptop and got my $30 off.
I paid off Ebay and have not used “pay later” since.
“Buy now, pay later” scams are how stupid people become (and stay) poor.
Housing is a necessity. You can either pay your landlord, or pay yourself. Your rent is NEVER paid off. Your mortgage is eventually paid off. Choose wisely.
You would bring an item to the layaway counter, like maybe a toaster or a stereo component and put some money down. They would then put your item in a bin and issue you a payment card with the balance owed. Once you had the balance paid off, they'd take the card and hand you your item.
The complete OPPOSITE of how it is done today.
I recently bought some hiking shoes online. As I was checking out, I was given an option of making four monthly payments. For hiking shoes? I just paid the entire amount but I thought that was crazy, setting up a payment plan for hiking shoes. No wonder some people are having financial issues.
I strongly disagree with you. I kind of like the idea of paying a 30-year fixed rate mortgage at 3% when the inflation rate is being reported at 8% but is probably much higher than that.
I am not anywhere near as smart as some FReepers about money, but the best thing I ever did was get out of and STAY out of debt. A lot less worries after that.
One of my rules of thumb is that I will not borrow more than I can pay off in 48 hours if necessary.
The old layaway plans are the opposite of financial sense when it comes to material goods. They lose value far more than you’d pay later.
Yes, usury credit rates aren’t much better, but delaying the ownership breaks the fundamental principle of time money value.
“As ‘buy now, pay later’ plans grow, so do delinquencies”
Now that’s funny. How else could there even BE a delinquency?
“When will people realize that their mortgages are exactly the same thing?
The company store credit card of slaves.”
How about that, I slaved my way to financial independence and didn’t even know it.
I use my credit card for gas & at Wal-Mart because I am older, female, and cannot afford to lose money to a thief.
I DO NOT carry more than $20...and I keep my bank balance below $20 so I cannot even get ATM $$$ to satisfy a thief.
I no longer shop at night only in daylight & I have my 85# Rottweiler in car with me.
Good job. I use my credit card to pay everything I possibly can. Never use cash, even at the car wash. Very seldom write a check and I DON’T have a debit card, the dumbest invention ever. I make hundreds of dollars a year in cash back and I pay no interest.
Same here. For some reason I don’t like the idea of using 0% interest loans or anything, but if I did I would use the same principle.
“When will people realize that their mortgages are exactly the same thing?
The company store credit card of slaves.”
LOL!
I bought my house in 2014 for $350k, 20% down. Refinanced. Mis about $230 with $1600 payments. A 2-br apartment rents for over $2k.
The similar house next door (a little larger by 125 sqft
) sold last month for $850k.
Money freed up by mortgage went stayed in quality dividend-paying stocks.
People like to say that even with a paid off mortgage and no other liens on the home that because of property taxes you never really own your home. There must be a reason why people say this but I don’t get it. I have to pay taxes on the fuel I put in my car do those people ever say the government owns the contents of their gas tank?
While it is true that if you neglect your property taxes at some point the government will place a tax lien on the place. However up until the time it goes to foreclosure the property owner retains control and can either bring the tax burden current or sell the place.
I don’t like paying taxes on my home any more than the next guy but with a paid off mortgage the cost to keep the place open for business is manageable, I calculate the price of what I call “The Big 5” (RE taxes, Insurance, heating oil, electricity and propane) at $1020.00/ month this is a 3 BR, 1600 sf ranch, detached garage on 3.5 acres so $12,500.00 a year to keep everyone off my ass.
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