Buyer beware: Unregulated ‘buy now, pay later’ loans can lead to greater debt and higher costs for you

By Sam Bourgi | Stacker (Stacker) – America’s debt addiction takes on a new twist—thanks to opaque, unregulated “buy now, pay later” loans that have swept retail in the past few years. There’s no single definition of a BNPL loan, but it usually refers to a point-of-sale loan that shoppers can pay off in smaller increments, often under the promise of interest-free payments. “BNPL is a pretty slick innovation. It is convenient and it’s basically free credit if you pay it off on time,” said Ed deHaan, a professor of accounting at Stanford Graduate School of Business. BNPL may be a “slick innovation,” but it’s also wrought with misuse, so much so that it’s landed on the Federal Reserve’s radar. According to a recent Fed report, BNPL loans can take advantage of financially fragile households by offering them lending products they don’t fully understand—and that eventually end up costing them more. Creditnews explores the growing trends in “buy now, pay later” loans and how one state is fighting for regulation. Creditnews Financially fragile consumers more likely to use BNPL loans Although a BNPL loan is a relatively new and still unregulated product, it’s no longer as niche as many think....