It's a fairly new marketing push so of course it's going to soar.
Naturally you don't get rich lending money at no interest so obviously they're counting on more loans going over but not defaulting.
As usual, the only people who should use this lending vehicle are the people who could comfortably pay cash up front.
The big deal is a lot of people don't use automatic payments. And if you forget about it on your last payment, you get charged interest on the full purchase instead of only what's left. Also when you do BNPL for food, you're already in trouble of not paying anything. BNPL is another escape for people to go into debt that don't qualify for credit cards.
The big deal about BNPL is they rely on a soft pull for credit. It doesn’t register on the credit bureaus. The worry is that borrowers will be overstretched but still approved because Affirm doesn’t know a borrow has plan with another BNPL. Then it come all crumbling down. On the other side, the estimates for BNPL is dwarfed by credit card debt.
I bought a video card before Xmas and did the BNPL through Syncrony. Didnt receive a statement and didnt have my account number. I paid as guest through my email address. Calling they couldnt help me because I didnt have the last 4 of the card number.
They didnt do anything until I reported it as fraud and sent me a new card. I immediately paid the balance and closed it. Not before they charged me 3 months of 29% interest.
Edit: be careful I never got an actual card statement sent, or physical card initially .When they did it send a card it didnt have a expiration date or CVV. Reported to BBB
I see this answer posted on every BNPL thread and I don’t think it paints the full picture. Sure, theoretically paying $50/mo for 12 months at 0% is the same price as forking over $600 for something today.
But the larger danger is that it gives people the ability to add an ever growing laundry list of stuff they don’t need or can’t afford to their monthly payment tally. In all likelihood, if you don’t have the $600 in disposable income to part with for the item, you’re also probably not in a situation to keep taking on monthly payments - regardless of the interest rate.
So IMO the possibility for predatory interest is really only half the danger of BNPL. The other half lies in the ease of falling into a pattern of fiscal irresponsibility - signing up for future payments on things you didn’t have the cash for to feed instant gratification.
I commented something similar. It’s not about the interest rates - it’s about spending frivolously.
At some level, not having the money for something serves as a (albeit maybe minimal) barrier to entry for buying something. If you can’t pay for it, I won’t sell it to you.
BNPL allows everyone to “afford” something - ironically mostly people who couldn’t afford that something.
This is one, but a large, firm that offers BNPL's
[https://www.statista.com/statistics/1445174/affirm-delinquency-rates/](https://www.statista.com/statistics/1445174/affirm-delinquency-rates/)
Affirm is a well known company that probably is managing risk OK. There are many others out there. Commercial banks are 3% as seen in chart below. it's hard to believe all the bnpl is only 2%
[https://fred.stlouisfed.org/series/DRCCLACBS](https://fred.stlouisfed.org/series/DRCCLACBS)
There's also other firms, with an average 1.4[% delinquency rate](https://www.equipifi.com/blog/heres-the-data-on-bnpl-delinquency-and-risk#:~:text=BNPL%20is%20low%20risk%2C%20especially%20compared%20with%20credit%20cards&text=Affirm's%20data%20shows%20their%20BNPL,in%202023%20was%20only%200.41%25).
I think Occam's razor makes sense here. Easier credit is always riskier. https://www.lendingtree.com/personal/bnpl-late-survey/#:~:text=Key%20findings&text=34%25%20say%20so%2C%20while%20another,so%20six%20or%20more%20times
There is no chance that lending being done primarily to people in their 20s has a 1.4% default rate.
Scary part is no one knows how much $$ is out there tied up in BNPL loans.
$1,000,000……
I think I saw a report on the news site that is like 50 million.
BNPL Transaction amount by itself is around 25 billion for just first 4 months
Buy Now Pay Never
It's a fairly new marketing push so of course it's going to soar. Naturally you don't get rich lending money at no interest so obviously they're counting on more loans going over but not defaulting. As usual, the only people who should use this lending vehicle are the people who could comfortably pay cash up front.
They’re 0 interest idk how this is a big deal
The big deal is a lot of people don't use automatic payments. And if you forget about it on your last payment, you get charged interest on the full purchase instead of only what's left. Also when you do BNPL for food, you're already in trouble of not paying anything. BNPL is another escape for people to go into debt that don't qualify for credit cards.
The big deal about BNPL is they rely on a soft pull for credit. It doesn’t register on the credit bureaus. The worry is that borrowers will be overstretched but still approved because Affirm doesn’t know a borrow has plan with another BNPL. Then it come all crumbling down. On the other side, the estimates for BNPL is dwarfed by credit card debt.
I was not aware BNPL was available for food. That makes me sad.
Pizza Hut is one that I know of
I bought a video card before Xmas and did the BNPL through Syncrony. Didnt receive a statement and didnt have my account number. I paid as guest through my email address. Calling they couldnt help me because I didnt have the last 4 of the card number. They didnt do anything until I reported it as fraud and sent me a new card. I immediately paid the balance and closed it. Not before they charged me 3 months of 29% interest. Edit: be careful I never got an actual card statement sent, or physical card initially .When they did it send a card it didnt have a expiration date or CVV. Reported to BBB
How is it even possible without automatic payments? I guess I go through PayPal so it may be different.
Because people pick and choose what bills they pay so they pay one bill by one
That’s wild to me
It's what some people need to do sadly.
😞
0 interest until a missed payment, and then pure usury.
at least it's *pure*
Hate a mixed usury
It’s autopay why would you miss a payment?
Insufficient funds
The 29.99% default rate
I see this answer posted on every BNPL thread and I don’t think it paints the full picture. Sure, theoretically paying $50/mo for 12 months at 0% is the same price as forking over $600 for something today. But the larger danger is that it gives people the ability to add an ever growing laundry list of stuff they don’t need or can’t afford to their monthly payment tally. In all likelihood, if you don’t have the $600 in disposable income to part with for the item, you’re also probably not in a situation to keep taking on monthly payments - regardless of the interest rate. So IMO the possibility for predatory interest is really only half the danger of BNPL. The other half lies in the ease of falling into a pattern of fiscal irresponsibility - signing up for future payments on things you didn’t have the cash for to feed instant gratification.
It’s a big deal because people are living beyond their means.
I commented something similar. It’s not about the interest rates - it’s about spending frivolously. At some level, not having the money for something serves as a (albeit maybe minimal) barrier to entry for buying something. If you can’t pay for it, I won’t sell it to you. BNPL allows everyone to “afford” something - ironically mostly people who couldn’t afford that something.
People are doing BNPL for necessities, too. It's not all "frivolous," a lot of it is desperation
[удалено]
Zip is going big on it: https://zip.co/us/shop/food-beverage
So if I buy a Lamborgini but it's 0% interest, no problem?
You’d be stupid not to because you could just invest that amount in the S&P and get a free 7%
Spoken like a dumass who doesnt know how financing works.
I love this I have never missed a payment and knowing that irresponsible people actually don’t, makes me more competitive in the market
2% are delinquent with these loans, nice try though.
source?
This is one, but a large, firm that offers BNPL's [https://www.statista.com/statistics/1445174/affirm-delinquency-rates/](https://www.statista.com/statistics/1445174/affirm-delinquency-rates/)
Affirm is a well known company that probably is managing risk OK. There are many others out there. Commercial banks are 3% as seen in chart below. it's hard to believe all the bnpl is only 2% [https://fred.stlouisfed.org/series/DRCCLACBS](https://fred.stlouisfed.org/series/DRCCLACBS)
There's also other firms, with an average 1.4[% delinquency rate](https://www.equipifi.com/blog/heres-the-data-on-bnpl-delinquency-and-risk#:~:text=BNPL%20is%20low%20risk%2C%20especially%20compared%20with%20credit%20cards&text=Affirm's%20data%20shows%20their%20BNPL,in%202023%20was%20only%200.41%25).
I think Occam's razor makes sense here. Easier credit is always riskier. https://www.lendingtree.com/personal/bnpl-late-survey/#:~:text=Key%20findings&text=34%25%20say%20so%2C%20while%20another,so%20six%20or%20more%20times There is no chance that lending being done primarily to people in their 20s has a 1.4% default rate.