The festive season is on in India and brings many new purchase lists to the bucket. Should you drop your festive spending for lack of money in your account? Definitely not; there are many alternatives like credit cards and BPNL(buy now, pay later option) to finish your bucket list in the festive season. The question at the juncture is which is the better alternative: credit card or buy now pay later? While both options have their pros and cons, we are here to explore more about BNPL to help you make an informed choice as per your requirements.
What is buy now pay later?
The buzzword BNPL is popular in the Indian economy today. It is an interest-free credit offered to users who want to make a purchase. Unlike the revolving credit option, which compels you to pay the total bill amount at the end of the billing cycle, you can use the buy now pay later in EMI, enjoying the easy installment option over a specific period. It is an effective alternative to credit cards. It is a quickly growing online payment method in India, and taking it beyond online channels could play a pivotal role in its growth.
How does buy now pay later in EMI work?
We humans are inclusive towards special discounts and offers on every purchase, be it big or small. Many online platforms that are running festive sales are the right destinations for availing deals. Buy now pay later options are short-term finance issued to people to make an online purchase, allowing them to repay in easy installments over a period at 0% interest. When you choose to go with the buy now pay later in EMI, you can make an online purchase with a participating retailer.
You should choose the buy now pay later in EMI at the checkout by paying a certain percentage of the purchase amount as a downpayment. The rest has to be repaid in easy installments over a period like months or weeks.
Your repayments will be auto-debited from the account or credit card as you choose. The key difference between the credit card and buy now pay later is repayment terms. The credit cards want you to repay the bill at the end of the billing cycle and charge interest rates otherwise. BNPL, on the contrary, wants you to repay the amount in easy installments at zero interest rates.
Do you pay more while using the buy now pay later app?
What is buy now pay later? Do you have to pay more when you choose the option to make an online purchase? A few queries raise concern for the customers who want to decide to buy now deliver later apps no credit check for online purchases. The good news is that the customers don’t pay anything more for using the purchase option. However, there will be no change in the product price as well. There might be a small processing fee for using buy now, pay later apps, no credit check, and it completely varies depending on the provider offering the service.
Eligibility
The basic eligibility criteria for buy now pay later apps no credit check varies as per each lender. However, some key criterion listed here helps to check your eligibility before checking one.
- Age limit 21 years-65 years
- Salaried person
- Minimum and maximum cap limits vary as per each lender
Credit you can get through BPNL
| BNPL Lender | Initial Credit* | days |
| Flipkart Pay Later | 10,000 | up to35 |
| Amazon Pay Later | 10000 | up to 45 |
| HDFC Bank FlexiPay | Rs 1000 – Rs 60,000 | up to 15 days |
| ICICI Bank Paylater | Rs 5000 – Rs 20000 | up to 45 days |
| Lazypay Pay Later | Rs 500 – Rs 9999 | Up to 15 days |
| Mobikwik Zip | Rs 500 – Rs 30000 | Up to 15 days |
Facts to know before opting for BPNL
EMI schedule
Buy now pay later in EMI has a fixed installment over a specific period without any interest. The customer becomes liable to pay some nominal interest when they exceed a particular period; there are nominal interest charges, which are less than the other lending tools.
Stick to the repayment schedule
You should stick to the repayment schedule very strongly to keep your credit score intact. Delays and denials in EMIs will affect your credit score.
Credit score
Unlike other lending tools, BPNL will have a soft check on your credit to approve your eligibility for the loan. It can be considered as a buy now, pay later app with no credit check. Having a good credit score will get good credit limits, but a poor credit score will not deny your eligibility for buy now pay later. The payment option will have a positive impact on the credit score when you pay the EMIs as scheduled.
Related charges
The buy now pay later interest charge is zero unless you refuse to pay them as per the scheduled EMIs. The buy now pay later interest charge is nominal compared to other lending tools. Few providers may charge a nominal joining fee for the service.
Difference between the credit card and buy now pay later
| Parameter | credit card | BNPL |
| Eligibility | Minimum income as defined by the issuer along with a good credit score | BNPL cards are primarily focussed towards millennials who may or may not have a credit score and customers looking for short term liquidity support |
| on boarding | The process is issuer dependent. Many are trying to move towards digital on-boarding but a few issuers still have traditional processes where it can take weeks to issue a card. | This is digital first on-boarding where the complete process can be done virtually. A new digital card can be used almost instantaneously. |
| Credit Limit | Credit limits are purely subjective to one’s income, credit score and the risk multiple of the issuer. | It ranges from INR 2,000 to 10 lakh which is dependent on the income, credit score and issuer. |
| Interest-free Period | You get upto 50-days of interest-free period in a regular billing cycle. Normally, the interest-free period is 30 days | You can also get a 90-day interest free period by breaking the principal amount into three equal instalments. |
| Joining Fee | Ranges from INR 0 to INR 5,000. Depends on card type and issuer | No joining fee( can vary at the discretion of provider) |
| Interest rate | Varies between 9% and 45% per annum subject to the type of card and the issuer. You have the facility to break the amount into three equal installments without incurring any interest charges. | However, if you carry forward a previous due amount, you are levied a carry forward fee. |
| Offers | Credit cards offer a plethora of offers to induce spending on the card | Largely similar deals are there, with a cap on the upper limits of discount. |
| Rewards | Most lucrative rewards, one can earn up to 10X points with accelerated rewards. The effective reward rates can be as high as 33% of total spends. | BNPL cards offer a cashback of up to 2%. |
| Premium Benefits | Premium benefits include domestic and international lounge access, facility of concierge, free golf games, accidental insurance and travel insurance | No premium benefits are available. |
| Easy EMI | Beyond the interest-free period of 50 days, you can spread the amount into EMIs of up to 36 months | Typically, no-cost EMIs are allowed for a maximum of 3 months currently. |
| Interface | Different card issuers are at varying points in the adoption of digital mediums for client services and interaction | As BNPL cards are primarily technology enabled platforms, it is easier for users to view transactions, rewards and offers on the app |
Should you choose to buy now pay later?
Buy now pay later interest charge is zero, and they are good for short-term spending if it is not an impulsive purchase. However, you should always avail it for mandate purchases because you are taking debt to make a purchase. The benefit of the buy now pay later option over other lending tools is its low cost. One can repay it easily in the short term with lower monthly repayments