Here's all you wanted to know about 'buy today, pay later' schemes

Here's all you wanted to know about 'buy today, pay later' schemes
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Businesses that once said ‘no credit’ have now changed their tune to say ‘credit available’. This is one of the biggest changes that have been ushered in by the COVID crisis.

The novel thing about this festive season is the financial service that allows you to buy today and pay later.

These days, the ads for even the best cars say, “Buy today, pay 90 days later.” A new financial service known as buy now, pay later, or abbreviated as BNPL, has become widespread, encouraging people to be a part of the ‘celebrations’ in this festive season.

Digital passbook

The new service is like buying groceries from the nearest grocery store, with the account written in a passbook and the payment to be done at the end of the month.

Banks and financial institutions (fintech companies) that use technology extensively have come out with the ‘pay later' services. With Ola app, you can travel as many times as you want without paying immediately. Ola keep track of how much you have to pay and deduct the amount from your linked bank account later.

Companies such as Amazon and Flipkart, banks such as ICICI Bank and fintech companies such as LazyPay also allow you to buy goods today and make the payment later.

Many facilities

This is a service provided to those who are able to repay the money‌. This will help avoid the problems one has to go through and the effort needed to get a credit card.

Mobile wallets offer a prepaid system, since you have to deposit money in advance. But the ‘pay later’ scheme is a postpaid system.

It also helps avoid the hassle of authorisation that is needed when making a payment online with a credit card or wallet.

Delay in repayment can cost you dear

Interest waiver is applicable only during the period allowed in the offer. Any failure to repay within the allotted period will result in interest, penalty, etc. If the bill is not paid within 14 days of receiving it, then 3% will be charged as monthly interest on the outstanding amount.

While the scheme seems attractive since no upfront payment is required, it is important to remember that there is a risk of getting into debt trap.

Many businesses now offer large discounts on full cash payment. Check if services that allow you to pay later are removing discounts.

Opt for the ‘celebrations’ through debt only after carefully studying all aspects of repayment capability.

This is a loan

This is actually a loan facility. The ICICI Bank’s ‘pay later’ scheme is a loan of up to Rs 10,000. You can purchase anything online, pay your bills and make payment at merchant establishments for up to this amount. The amount used for transactions done over 30 days will be deducted from your savings linked to the scheme. You will get an interest-free period of 45 days.

Apps like LazyPay allow you to buy goods and services that cost a small amount to up to Rs 15,000 from e-commerce platforms, shops, online taxis, cinema theatres and restaurants. A bill will be generated by grouping together all the transactions. The amount to be paid as per the billing cycle will be deducted from the linked savings account.

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