Buy now, pay later: convenience or debt trap?
The phenomenon is not new but many people are unaware of the conditions.
Aubrey Masango speaks to expert Dr Frank Magwegwe on Financial Matters.
While the buy now pay later (BNPL) phenomenon is not new, many people are unaware of the conditions.
BNPL is a short-term financing that allows consumers to purchase an item and pay for it over time.
It offers instant gratification and can be incredibly convenient.
“Instead of the traditional lay-by, where you wait to get your products at the end, this allows you to pay the first instalment and you get your product… you choose your payment period [and] they don’t charge interest, they charge fees.”
- Dr Frank Magwegwe
The omission of interest is due to South African laws – you must be a registered credit provider.
This means it that BNPL will also not reflect on your credit score.
While this option may seem favourable for many, there are concerns that it has increased indebtedness among consumers.
Magwegwe emphasis that it is important for people to fully understand what BNPL means in order to make an informed decision.
“Ultimately you are paying overtime because you don’t have the money.”
- Dr Frank Magwegwe
Scroll up to the audio player to listen to the discussion