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The Pros and Cons of “Buy now, Pay later” Scheme

“Buy now, pay later” schemes, also known as deferred payment plans, are financing options that allow customers to make purchases and pay for them at a later date. These schemes can take many forms, such as layaway plans, store credit, or installment plans.

The scheme enables the customer to make a purchase without paying the full amount upfront. Instead, they can pay for the purchase in instalments over a period of time. The terms and conditions of these schemes vary, but they usually come with interest and fees if the customer fails to make payments on time.

Pros of “buy now, pay later” scheme

  • Convenience: They allow customers to make purchases without having to pay for them upfront, which can be beneficial for those who may not have the funds available at the time of purchase.
  • Flexibility: These options often provide customers with a variety of payment plans to choose from, such as interest-free instalments over a certain period of time.
  • Increased sales: By offering “buy now, pay later” options, retailers may be able to increase sales by appealing to customers who may not have been able to make the purchase otherwise.

The cons of “buy now, pay later” scheme

  • Risk of overspending: These options can make it easy for customers to make impulse purchases or overspend, which can lead to financial difficulties down the line.
  • Interest and fees: Some “buy now, pay later” options come with interest and fees, which can make the overall cost of the purchase more expensive in the long run.
  • Credit score: Late payments or defaulting on “buy now, pay later” plans can have a negative impact on a customer’s credit score.

While these schemes can be convenient and flexible, they also have their downsides. They can increase the risk of overspending, lead to high-interest rates and fees, and have a negative impact on the customer’s credit score if they fail to make payments on time. Therefore, it’s crucial for customers to understand the terms and conditions before using “buy now, pay later” schemes.

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