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'Buy now pay later' offers zero-interest credit; but should you avail it?

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The term 'buy now pay later' refers to the customer taking home their purchase but paying for it over time.

'Buy now pay later' offers zero-interest credit; but should you avail it?
Credit cards provide financial freedom in times of emergencies. However, approaching a bank to get approval for the credit card and going through the process of rejections may sometimes seem difficult.
For such customers, 'buy now pay later' concept comes as a rescue.
The term 'buy now pay later' refers to the customer taking home their purchase but paying for it over time.
‘Buy-now-pay-later' products are helpful for customers as they don't levy any interest or additional charges on the bill, according to financial experts.
"Also, many users are going through economic hardship due to the current situation and this facility can provide them the flexibility to pay at their own convenience," Nitya Sharma, chief executive officer and founder, Simpl, added.
These products generally provide customers with the convenience of payments for essential purchases along with a 15-30 day cushion for repayments without worrying about salary irregularities.
“Since these are short-term in nature and smaller in value than traditional loans, these can easily be availed without a major credit burden," said Deep Agrawal, head - payments, PhonePe.
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There are other benefits too.
Unlike card payments or internet banking where consumers need to pay upfront for a product, this option allows them to first get the product, try and be satisfied and then make the payment.
"As customers are not entering the card or bank details on every e-commerce payment portal, they are not prone to phishing or account hacking, therefore it adds an additional layer of security," said Samir Kapur, an independent consultant.
Additionally, it does away with the hassles associated with handling cash.
One no longer needs to struggle to find change or worry about the order not getting delivered when customers are not around to make the payment.
But, all is well until the consumer pays in time.
Trouble starts when the payment is delayed.
"Users may have to shell out interest and other charges on paying late. This also has high chances of impacting the credit score adversely," said experts.
Even if the customers pay back the full amount along with late payment charges, the credit history can be impacted.
Nevertheless, consumers can consider ‘buy now pay later’ concept to meet the short-term liquidity issues as long as they are sure they will be able to pay back in time.