If you’ve shopped online or in-store lately, you’ve likely seen advertisements for ‘buy now pay later.’ It sounds like layaway, but it’s much different. BNPL helps you get what you want now, but only pay a fraction of the cost at checkout.
It can be a great way to spread out the cost of large purchases, which is why many people use buy now pay later on TVs. But it’s important to know how it works, who qualifies, and what you should consider before choosing this option.
What is Buy Now Pay Later?
Buy now pay later is a version of layaway except you get your purchase now, not when you pay it off. Instead, you get an installment loan that spreads your payments out over a term, requiring equal payments throughout the term.
How Does it Work?
If you want to use buy now pay later on a TV, you’ll tell the clerk at checkout (or check the option online).
To qualify, you’ll complete a quick application, but don’t let that scare you. Many BNPL plans don’t require a credit check or if they do, they don’t turn you down if you have a bad credit score.
Each application is different, but most applications ask for your:
- Phone number
- Date of birth
- Bank account (for automatic payments)
The financing company will typically do a ‘soft credit check’ which doesn’t hurt your credit. They’ll provide you with an answer in seconds.
If you’re approved, you typically have two options:
- Pay in 4 – With this plan you split your total into four equal installments, paying 25% at checkout and make equal payments of 25% of the total every 2 weeks until it’s paid off. You won’t pay interest or fees to use this plan unless you miss a payment.
- Longer installment periods – If you need a longer time to pay the TV off, you can choose a longer period, such as 12 months or sometimes even 24 months, however, you’ll pay interest of 10% - 30% to use this option.
What are the Benefits of Buy Now Pay Later on TVs?
- You may get a plan that doesn’t charge interest or fees. This gives you more time to pay the TV off without costing you more money.
- You don’t need a specific credit score like you might for a personal loan or even a credit card.
- It’s easy to apply. It takes only seconds to find out if you qualify and it doesn’t hurt your credit score.
What are the Downsides of Buy Now Pay Later on TVs?
- BNPL encourages impulse buys. Hopefully, you’ll think about your purchase before buying a TV, but knowing you only need to pay 25% now can make it seem much more affordable than it is.
- You could get in over your head in debt. It’s hard to keep track of what you owe and when if you use a lot of buy now pay later plans. You may think you can afford it since the payment sounds low, but when you look at your budget, it may not be as affordable.
- The fees are high if you miss a payment. The program is generally free if you pay your bills on time. If you miss a payment though, you could get hit hard with fees and interest.
What Should you Look for in a BNPL Plan?
Before you say ‘yes’ to buy now later on a TV, know what to look for in a plan.
Reputable buy now pay later plans don’t charge fees to the consumer. Instead, the merchant pays the fee. Merchants are willing to pay the fees because the BNPL plan brings in more customers and higher sales. If you come across a BNPL plan that charges consumers, be wary.
Know the Interest Charges
Know how much a plan will cost in interest. Most BNPL plans are interest-free but don’t assume. It’s typically only the ‘pay in 4’ plans that don’t charge interest. Any other plan that stretches payments out over 6 – 24 months charges interest and it could be even more than your credit card charges.
Know how Payments are Made
Most buy now pay later plans require you to connect your credit or debit card to the account for automatic payments. If you tie your credit card to it and don’t pay the balance in full, you’ll pay interest on your credit card. Instead, try connecting your debit card or checking account so the money comes right out of your account interest-free.
Questions to ask Yourself Before Using Buy Now Pay Later on a TV
Before you use buy now pay later on a TV, ask yourself:
- Was I planning on buying a TV?
- Can I afford the payment and not miss one?
- Will I pay interest on the purchase?
- Is it smarter to save the money myself and pay for the TV in full?
Buy now pay later for TVs can make buying a TV much more affordable. Just make sure you don’t ‘supersize’ your purchase because you can spread the payments out over time. Many people still spend the same amount they had in their checking account to spend but buy a larger or more expensive TV because they can split the cost in fourths.
While it can be a good way to make a TV more affordable and it may even help you earn interest on your money while you wait to pay the debt off, it can backfire if you aren’t careful.
Only use reputable buy now pay later companies and only do so after you are sure you can afford the payments.