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Everything You Need to Know About Buy Now, Pay Later Concept 

Everything You Need to Know About Buy Now, Pay Later Concept  | OpenGrowth


When you go shopping, has it ever happened that you liked a certain product, but it was out of your budget? Then you compromise and move ahead, thinking, ‘I will purchase it next time.’ When you go to buy it a few days later, the product is out of stock. For you, buy more, pay later is a boon. 


What is the concept of ‘Buy Now Pay Later'? 

Buy more pay later is a kind of short-term financing. By availing of this service, the customers can make purchases and pay for them at a future date. In most cases, the payments are interest-free. This is gradually becoming a trend, especially while shopping online. 

Using a buy now pay later option, you can buy the products of your choice and keep making the payments in installments. There are a few companies that offer these small loans. Also, some credit card companies also allow people to purchase a product and give them a pay-in installments option. However, their interests may vary.  With this you might also be able to buy a nice car, may be the hatchbacks Tesla is about to launch at $25K. 

After we have understood the concept of ‘But now, pay later, let us know how it works.  



How does Buy Now Pay Later function?

Each company offering this service works on different pay models. They have their own terms and conditions along with their decided interest rates. However, the process is almost the same. 

  • You pick an object that you like. Take it to the checkout counter and request a buy now, pay later option. 
  • Once your request is approved, you have to make a small down payment. Most companies ask for a down payment of 25 % of the total cost of that particular object. 
  • You then avail loan and pay the amount in a decided number of installments, depending on how much your purchase costs. 
  • Your payments can be made through either pre-dated cheques, deductions from your account, or through your debit cards. 


How is Buy now, pay later different from paying through credit cards? 

Making payments through both channels involves delays in payments and payments in installments. When you use a credit card, you pay only a small amount due on your card each month. You pay the interest on the remaining amount till you pay the full amount. 

However, when using the Buy now, pay later concept, you do not have to pay interests in most cases. You have to pay monthly installments on time, extending to months if the purchase amount is too high. You already are told the monthly installment amount at the checkout counter and usually, the amount does not differ. 

Also, for approval of the loan, the companies only need small credit verification of the buyer. Therefore, the loans are usually approved in seconds. However, when you apply for a credit card, you go through a series of checks and verification procedures. Also, while you are availing loans on your credit card, the process of approval is very complicated. 

Buy now pay later can be a good alternative to loans if you know what specific product you want to buy and a company selling this product  are able to offer a BNPL deal. If the product you want to purchase doesn’t offer buy now pay later, you might consider traditional cash loans for you purchase. You also might have to revert back to traditional loans if you have bad credit, these loans usually come with a bit of a higher interest rate as there’s increased risk for the lender.



Things to Remember while opting for this service


Read the Terms carefully

Before you opt for this service, make sure that you read all the terms and conditions carefully. These terms can vary while making each purchase and for every company. Also, your interest rate may vary depending on your purchase and loan terms. 


Know how your payments will work 

Before saying yes to this service, you need to understand well how your payments will work. How much installment you need to pay. What is going to be your interest rate, if any. What happens if you miss paying one installment. How much late fees will be charged if you pay an installment after the fixed date. Answers to all these questions are needed and checked before you avail of this service to avoid further inconvenience. 


Interest-free loans not guaranteed

You also need to check that though your loan may have been approved for a 0% interest rate, the loan companies can add additional interest depending on the loan amount and its tenure. 


Consider return policies 

When you purchase an item under the buy now pay later policy, the merchant may allow you to return an item. However, you might not be able to cancel the buy now pay later service immediately. You have to show complete proof from the merchant to the company that has given you the loan. Only after thorough verification, you can cancel your loan.


Pros and Cons of Buy now pay later 



  • Though in installments, payment methods are disciplined. 
  • Suffice your needs immediately.
  • Low interest or zero interest rate loans 
  • Short term loans 
  • Approval within seconds 
  • Improves your credit score. 



  • Difficult to track payments 
  • Pay late fees when installments are missed or paid pate 
  • No cash back policies on purchases while availing to these loans 
  • Payments may continue even if the item is returned. 

Every coin has two sides. So do buy now pay later service. However, this is a boon for those who wish to get things in lesser down payment and continue paying in installments. 


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An artist by heart and a writer by profession, Prachi is a vivacious reader.  She believes in hard work and her dedication has never let her down. She puts her heart and soul in everthing she does. Though life has not been a bed of roses for her, she affirms that the best way to live it is to maintain an equillibrium between the tunes of life.