The Risks of Buy Now Pay Later Credit Plans
Nearly every retail store offers buy now – pay later plans that come along with interest free financing. These deals are a way to get what you want now, even if you don’t have the money. Although you are not being charged interest on these purchases, can you really determine that these types of payments plan come without risk? Here are some of the risks of buy now – pay later payment credit plans:
After the initial term, the interest increases. After the term of the buy now – pay later plan the interest can go from zero to upwards of thirty percent within a month! A couple of months before the term is over, the consumer is sent notices that will warn you of the impending interest rate which could accumulate upwards of several hundred dollars per month, depending on the price of original purchase. If you are unable to repay the buy now – pay later purchase within the term than the purchase should be avoided.
What if your situation changes? These terms often last an average of twelve to eighteen months. How secure is your job? Are you going to have regular employment in eighteen months? With the current state of the economy, it can be a bad idea to plan for the future and purchases that you are going to have to fund. Even if you start saving now, are you going to be able to continue the saving plan to pay for the purchase? The item cannot be returned. After the item is used it cannot be returned – even if you are unable to pay. You will need to come up with the money to repay the debt for the item when it comes due or you will have interest payments to pay for, aside from the balance that is to be paid. Interest can accumulate monthly and become quite the expense.
Multiple Items may seem enticing. If you are like many other consumers you take advantage of buy now – pay later payment plans for multiple purchases from a television to a sofa set, to other pieces of furniture than you could be shocked later when the payments are due and you suddenly are in debt thousands of dollars for this merchandise.
Buy now – pay later plans are valuable tools for establishing a credit. If you are going to take advantage of buy now – pay later plans than you should have the money in savings ready to pay for the item when the payment comes due for certain items.
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