Buy now, pay later loans are a popular way to purchase items that you cannot afford up front. BNPL financing allows consumers to break their purchase into smaller payments that are repaid over several weeks.
Customers can use the loans to buy clothing, groceries, or home appliances. A new survey from LendingTree finds about four in 10 people paid late on these loans in the past year.
Missing a payment can lead to late fees and potential damage to a person's credit. However, LendingTree also found that 88% of those who asked to have a buy now, pay later late fee waived were successful in at least getting it reduced.
Norfolk resident Becca Bailey was shopping online for clothes when she first saw the option to use a buy now, pay later service. She used Afterpay, which LendingTree notes is one of the most commonly used lenders in this space.
"I think literally [I saw it] from the website I was just like, 'Oh, I can get what I want now, and I don't have to pay for all of it now,'" Bailey said.
The service provided an easy way for her to get new clothes that she said she couldn’t afford at the time.
While BNPL loans can be effective if a person can confidently repay the loan quickly, it requires careful management.
"Could be good, could be bad depending on your ability to manage it," Bailey said.
Bailey managed her buy now, pay later loans but found the most trouble with credit cards. She racked up a lot of debt and had to reach out to a financial counselor.
"I think it was very easy as I've kind of gone through a lot of life changes to just kind of be like, 'OK, I'll, you know, use it to fix this now and then I'll just fix the credit card later,'" Bailey said.
"My financial literacy has definitely been kind of a process, but I think even at that point, you know, I was kind of aware enough to be like, 'OK, this is, this has to stop,'" Bailey said.
She is now working with Money Management International to pay down her loans and expects to be debt-free in five years.
Bailey wanted to share her story to normalize making financial mistakes, learning, and getting back on track.
"I definitely have that kind of attitude about everything — I feel like you can always fix everything. Like, there's always a solution. There's nothing that can't be fixed in some way," Bailey said.
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