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The Buy Now, Pay Later scheme, as its name suggests, is a tactic that is used to allow customers to buy products and pay the price in installments or at a later date. While this may seem like a good deal for many, it may become a debt trap if the person isn’t careful.
Debt traps may sound insidious and sinister but mostly do not start out with malicious intent. However, no matter the intent, the risk is still the same for people who enter this type of arrangement. This blog post will shed light on buy now, pay later schemes and why people will do well to avoid them as much as possible.
Why Deferred Payments Can Be a Debt Trap
“Buy Now, Pay Later” schemes, as they’re being called, have been around for decades. This scheme has been used by businesses as a way to entice potential clients who want to purchase a product but may not have the funds at that particular time to pay the full price. This may sound great on paper, but it has its downsides. Here is a list of reasons why deferring payments may turn into a debt trap later on.
1 – BNPL Encourages Impulse Buying
The idea behind a “Buy Now, Pay Later” scheme is to entice people to spend money they don’t have, with the promise of paying the cost in installments at a later date. At the same time, this may seem like a great way to buy; spending money that hasn’t been earned yet can be catastrophic if the situation is not handled with care.
2 – Multiple BNPL Offers Can Add up Quickly
While the idea of paying for a product at a later date may seem harmless enough, it may become a problem if the person doesn’t have the money to pay the cost of the product or expenses that are associated with that product. This can be extremely problematic if the person has multiple BNPL offers at their disposal. The money will be used up quickly, and the person may have no way of covering their costs.
3 – It Encourages People to Accept Bills for Products They Can’t Afford
Another concern with the “Buy Now, Pay Later” schemes is that they can encourage people to take on bills for products that they can’t afford. This can be very dangerous when the person has trouble covering the costs.
4 – BNPL Allows People to Pay for Something They Can’t Afford in the First Place
Another concern with paying for products in installments is that the person may not be able to afford it in the first place. If the person has this problem, it may be best for them to avoid “Buy Now, Pay Later” schemes altogether. Not only will they avoid debt traps, but they will also avoid wasting money.
Conclusion
The idea behind a “Buy Now, Pay Later” scheme may sound great on paper, but it has many hidden dangers. There are many reasons why people should avoid BNPL schemes altogether. If a person is currently involved in a BNPL scheme, they should do whatever they can to get out of it and put their money to better use.
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