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The Dark Side of Buy Now, Pay Later: What Every Shopper Must Know

by | May 27, 2025 | Credit Cards, Personal Finance

buy now pay later

With the age of AI-led, digital-first shopping, today’s consumers are choosing Buy Now, Pay Later (BNPL) products like ZestMoney, Simpl, LazyPay, and Amazon Pay Later. This allows customers to purchase instantly and pay conveniently in instalments without needing a credit card.

While this might sound wonderful, especially to young consumers or those with no credit, certain merits and demerits of BNPL products must be considered.

 
How Buy Now, Pay Later Works?

BNPL is a short-term credit facility that funds your purchase into small, manageable payments. The services are online and in some offline outlets as well.

The Standard Process for the same is listed below:

  • Choose the product you want and add it to your shopping cart on the website.
  • Select BNPL on checkout.
  • Get Approval instantly with basic KYC.
  • Pay Instalments: Interest-free for short durations (maximum 3 months), interest-based for extended durations (3-12 months).

Advantages of Buy Now, Pay Later (BNPL):

  • No credit card necessary: BNPL solutions provide payment without a credit card, hence accessible to students, new employees, or those with no credit history.
  • Fast approval: Approval is fast and convenient with few KYC documents and a phone number needed in most instances, compared to slow and cumbersome traditional loans.
  • No-cost EMI: All players in BNPL provide interest-free EMI on the majority of products, particularly electronics, fashion, and lifestyle. That means you can pay in instalments for a few months without incurring any additional cost.
  • Makes it cheaper: BNPL allows customers to buy costly items by breaking the amount into smaller payments, making the item affordable for the month.

Disadvantages of Buy Now, Pay Later (BNPL):

  • Late charges: One late EMI can incur huge late charges, usually ranging from ₹500 to ₹1,000, which can accumulate quickly and tighten the purse strings.
  • Impulse purchasing: Easy access to deferred payments might encourage consumers to purchase products they do not need or luxuries they might otherwise be incapable of affording, leading to overspending.
  • Credit score effect: Though certain BNPL lenders do not report to credit bureaus at first, future defaults or non-payments will likely be reported and can adversely impact your CIBIL or credit score.
  • Debt trap risk: As there are multiple BNPL platforms, there is a greater risk of overspending. Borrowing loans for multiple services without keeping track of payments can get someone into a debt trap.

Is BNPL Suitable for You?

The suitability of Buy Now, Pay Later (BNPL) will heavily depend on your financial prudence, consistent income, and ability to fit repayment into your budget without compromising on essentials. While BNPL may be helpful in the short run, it is always best to check whether it aligns with your budget and lifestyle.

Key Considerations Before BNPL Utilization

  • Am I able to afford the repayments without reducing on necessities?
    • Ensure that BNPL payments every month do not clash with the payment of necessities like rent, food, bills, or in case of emergencies.
  • Is the BNPL scheme interest-free, or does it conceal charges?
    • Read the fine print carefully. Sites can provide 0% EMI but may have processing charges or increase the cost of the product.
  • Is it an urgent and necessary purchase?
    • Think about whether the thing you are about to buy is something you require or an impulse purchase. BNPL should only be applied to necessary and planned purchases and not to lifestyle purchases
  • What are the late fee policies?
    • Understand the after-effects of delayed payment. Some services charge extremely high fines or affect your credit score in the event of repeated defaults.

For Students & Young Professionals

BNPL can be a convenient facility to use when purchasing laptops, study materials, or equipment for developing skills that enhance your personal and professional development. But:

  • Only take 0% EMI plans so that you will not have to pay more than the price.
  • Don’t open several BNPL accounts—too many instalments can lead to missed EMIs and financial tension.
  • Make sure to mark all due dates using reminders or budgeting programs to ensure timely payments.

For Families

The families that like to purchase bulk goods like home appliances, electronics, or festival season shopping, where prepayment could be inconvenient. 

  • Make a budget and consider how the BNPL payments will work within your family’s cash flow on a monthly basis. 
  • Limit the transactions through BNPL so that you can closely track and monitor all the payments. 
  • Use BNPL for products that offer true value and not merely because something is being promoted or offered. 

Bottomline

Buy Now, Pay Later is a powerful financial tool that can simplify purchases and reduce costs if used wisely. Overuse or abuse of BNPL, however, can quickly lead to financial pressure, unwanted late charges, and long-term debt. It’s essential to read the terms and conditions regarding late payment fees and interest rates. Set reminders for payments, use BNPL responsibly, and keep track of your credit score to make the most of this financing option. Remember, the key is to use BNPL like any loan—only borrow for essential purchases that you can afford to repay.

Written by: Tanya Kumari

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