Buy Now Pay Later is a super easy way to shop now and pay in small chunks later, especially amongst millennials and gen z. Between 2020 and 2024, Buy Now Pay Later went from a buzzword to a full-blown trend. Over 60 million Indians used BNPL, and Purchases via BNPL crossed ₹12,000 crores.
Here is the basic idea:
You buy something today (often online), and pay for it later – either on the next due date or in EMIs. It’s either interest-free for short terms (usually 1-3 months) or comes with very high interest rate (20-36%) for longer terms. There’s no need for a high CIBIL score or income proof upfront. Sounds smooth, right? But wait — there’s more to it.
Why the craze?
“No paperwork, 0% interest, quick approval — it feels like free money!” But here’s the catch — many users failed to repay on time, and that messed up their credit scores.
BNPL vs personal loan vs credit card :
| Features | BNPL | Credit cards | Personal loan |
| Credit score needed | Low to none | Medium to high | Medium to high |
| Interest rate | From 0% up to 40% if not paid on time | Up to 36% if not paid on time | 10-24% |
| Rewards | None | Yes | None |
| Best for | Small spendings | Households expenses | Bigger purchases |
- Tip: Buy Now Pay Later is simple, but credit cards often offer more rewards and better flexibility .
Popular Buy Now Pay Later apps in India —
| App | Limit | Late payment charges |
| Simpl | Up to ₹25000 | Late fees + gst |
| Lazypay | Up to ₹100000 | 15-30% |
| Amazon pay later | Up to₹60000 | Up to ₹600 |
| ZestMoney | Up to ₹200000 | Up to ₹200 |
- Always read the fine print — terms and conditions, late fees, and auto-debit settings can surprise you.
Pros and Cons of using BNPL :
- Pros —
- Quick and easy access to credit.
- No need for a credit card.
- Helps build credit score (if used smartly).
- Good option for salaried folks with stable income.
- Cons —
- While it looks easy and simple, it also makes it easy to overspend.
- There can be late payment fees and hidden charges, which can hurt your CIBIL score.
- Some apps have aggressive recovery teams, so use them wisely and responsibly.
How BNPL effects your credit score :
Nowadays, lenders can store and report your credit data to credit rating agencies. If you miss a payment lenders might not report it to the credit rating agencies initially, but it will hurt your future credit health.
Buy Now Pay Later isn’t “free credit” — it’s real borrowing, and it shows up on your report.
How to use Buy Now Pay Later smartly :
- Stick to 1–2 apps max.
- Don’t buy wants — only needs.
- Always pay before the due date.
- Auto debit is a better option for someone with a predictable source of income. By setting up auto debit one can avoid late fees and penalties. But if your income source isn’t consistent, it’s better to avoid auto debit and set manual reminder instead.
Think of BNPL as a temporary helper, not free money.
Better alternatives to Buy Now Pay Later:
Having any kind of debt is not ideal for your personal finance. It can eat up your future wealth. But, some emergency might occur without any prior notice. In that case you can use credit cards for smaller purchases, it also gives you rewards. You can even take a bank personal loan, it comes with lower interest rate.BNPL isn’t your only option — and sometimes not the best one.
Final thought
BNPL can be your best friend or your worst enemy — it all depends on how you use it. Before you click “Pay Later”, ask yourself: “Can I repay this amount within 15-30 days,without stress? ”If the answer is no…then BNPL = Borrow Now, Panic Later.
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