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From the article > “While a pay-in-four plan doesn’t usually charge interest, longer-term BNPL plans may charge an annual percentage rate up to 30%,” an articl

by ollien 4y ago

From the article > “While a pay-in-four plan doesn’t usually charge interest, longer-term BNPL plans may charge an annual percentage rate up to 30%,” an article in Nerdwallet noted in 2022. “Fees, like for late or rescheduled payments, range from $1 to $10 and are sometimes capped at 25% of the purchase value, depending on the company.” So I guess if you pay in a four-month-installment on time, it could make sense, but that seems like a super risky gamble.

jongjong 4y ago
A few months ago, I bought a car with a loan. I was surprised to learn that essentially all lenders offer a fixed 8% interest rate... When annual inflation is at least 10% in my country and reserve bank interest rates are on the rise. If it was a variable interest rate, that would present some risk. But it's not even the case. It's literally a fixed 8% annual rate over 5 years (by which point the loan will have been fully paid). So assuming that I can keep my income in line with inflation, it ends up becoming easier to repay my loan as inflation progresses. It's not quite the same situation for people with real estate mortgages as their rate is variable (or fixed only for a couple of years; so not really fixed when you consider that the loan is 20 to 30 years...) and their repayments increase along with the reserve bank interest rates. My repayments are constant and my debt is being inflated away as we speak. I bought a basic/small, but good quality car as I think it will hold its value well due to its focus on utility and fuel (cost) efficiency.
toast0 4y ago
If you have the $10 for lunch, you can either pay in cash, or put it into your buy now pay later slush fund and pay on time. There's no fiscal risk, only behavioral risk. Ally Bank currently offers 4% apy interest on a Money Market Savings, maybe you can find similar from a better bank. 4% apy over the term isn't much, but it's certainly fiscally better than paying cash today.

by ollien 4y ago

jongjong 4y ago

A few months ago, I bought a car with a loan. I was surprised to learn that essentially all lenders offer a fixed 8% interest rate... When annual inflation is at least 10% in my country and reserve bank interest rates are on the rise. If it was a variable interest rate, that would present some risk. But it's not even the case. It's literally a fixed 8% annual rate over 5 years (by which point the loan will have been fully paid). So assuming that I can keep my income in line with inflation, it ends up becoming easier to repay my loan as inflation progresses. It's not quite the same situation for people with real estate mortgages as their rate is variable (or fixed only for a couple of years; so not really fixed when you consider that the loan is 20 to 30 years...) and their repayments increase along with the reserve bank interest rates. My repayments are constant and my debt is being inflated away as we speak. I bought a basic/small, but good quality car as I think it will hold its value well due to its focus on utility and fuel (cost) efficiency.

toast0 4y ago

If you have the $10 for lunch, you can either pay in cash, or put it into your buy now pay later slush fund and pay on time. There's no fiscal risk, only behavioral risk. Ally Bank currently offers 4% apy interest on a Money Market Savings, maybe you can find similar from a better bank. 4% apy over the term isn't much, but it's certainly fiscally better than paying cash today.