The Buy Now, Pay Later (BNPL) facility is becoming increasingly popular as more and more e-commerce platforms, banks and retailers now offer it. Thanks to its easy and quick approval, a large number of borrowers can now access short-term credit instantly.
To better understand what is Buy Now, Pay Later, how it works, its advantages and more, read on.
BNPL Meaning
It is also known as a Point-of-Sale (POS) instalment loan, as you can opt for it at the time of payment. Here are some important points to understand its meaning:
- It is a type of short-term financing, typically offered with no-cost or low-cost EMIs
- You can pay for the purchases in instalments by making a small upfront down payment
- You can spread the instalments over a flexible tenure, depending on the lender
How the Buy Now, Pay Later Services Work?
Now that you know what is BNPL, here are some key points to understand how it works.
- You will have to opt for the facility at the time of checkout when purchasing from a partner retailer
- Upon approval, you need to make a small down payment and the lender will pay the remaining cost to the retailer
- You also need to choose a suitable repayment tenure to pay the remaining amount to the lender through a series of instalments with no or low interest
- Upon complete repayment, your credit account with the lender will close
What are the Things to Consider While Choosing a BNPL Facility?
The following are some of the points you need to keep in mind when applying for a Point-of-Sale instalment loan:
- You must ensure that the amount you apply for is manageable and that you can repay it without any financial strain
- You must look for a suitable repayment tenure to ensure timely payments because non-payment or late payment of BNPL EMIs can negatively impact your credit history
- You should examine if the scheme is restricted to a single merchant or if you can avail of it at multiple retailers
- You must avoid falling into a debt cycle by ensuring you don’t overspend by leveraging the scheme
- You must check the available credit limit before applying to ensure you borrow within the limit
Also Read: Different Types of Loans that You Should Know
What Future Holds for BNPL Services?
As a customer-centric scheme, the facility has grown in popularity and is expected to continue to do so. Here are some trends that reflect that the future is bright for this credit scheme:
- There has been a rise in partnerships between financial institutions and retailers to provide this scheme
- Since some companies provide exclusive offers and discounts, it has become a preferred option
- BNPL service providers are now expanding into new markets, including healthcare, Edtech, and more
You can access credit through the Buy Now, Pay Later facility from Fibe for a wide range of services like medical requirements and online courses. With its 100% digital and simple application process, you can instantly get a loan for services up to ₹10 lakhs. Download the Fibe App to get this affordable loan with easy repayment options at no-cost or low-cost EMIs.
FAQs on What is Buy Now, Pay Later Scheme
How does Buy Now, Pay Later work?
Here is how the BNPL scheme functions:
- You can purchase from retailers who have partnered with institutions offering the facility
- You will need to select the ‘Buy Now, Pay Later’ option at the checkout
- Once approved, you will have to make a small downpayment and choose a tenure
- You can repay the remaining amount in instalments spread over the selected term
What are the benefits of BNPL?
Here are some of the advantages of choosing this scheme:
- It makes instant credit available
- It makes big-ticket purchases affordable and easy on the pocket
- This service offers cost-free or low-cost EMIs
What is the maximum amount of BNPL?
This depends on the financial institution you choose. With Fibe, you can access credit worth ₹10 lacs through the Buy Now, Pay Later service.
What is the difference between BNPL and EMI?
Here is the key difference between these two:
- BNPL is the instant credit facility offered by financial institutions
- EMI refers to the repayment facility offered under BNPL and other credit facilities
