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One of the most valuable life lessons my parents ever taught me was "If you can't afford it now, you can't afford it at all." YES, there is a time and place fo

One of the most valuable life lessons my parents ever taught me was "If you can't afford it now, you can't afford it at all." YES, there is a time and place for financing (especially when interest rates were near zero and you have good impulse control) but the entire "buy now pay later" industry just reeks of preying on people that aren't as financially literate or have little impulse control, and I won't touch the companies with a ten foot pole. Honestly a bit disappointing to see this from Apple.

paxys 4y ago
Exactly. Taking a 15-30 year loan to buy a house makes sense. Using Affirm or Klarna or Apple Pay Later to buy groceries or a new laptop does not.
- deleted 4y ago
  [deleted]
agentdrtran 4y ago
If your laptop breaks and you need a new one you are probably better off doing BNPL if you can instead of buying a cheap, crappy one now.
- raincole 4y ago
  Well it's actually boiled down to if you make money with your laptop. I guess most people on HN are programmers so of course they do. But the question is not good laptop vs crappy laptop, it's consumption vs investment.
  - Jcowell 4y ago
    What do you’re a student in uni? Averagely, Your laptop won’t make any money until you graduate , get a job , and pay off your loans.
Aaronstotle 4y ago
I initially purchased my new iphone 12 in monthly installments, yes I could have paid for it outright, but I didn't see the point in paying ~1k upfront.
- kimbernator 4y ago
  If you're referring to a carrier's zero interest payments on the full price of the phone, that's just smart. No penalty for borrowing. If there was interest involved, it gets fuzzier. I'll amend this by saying that there's also another huge requirement for it to make sense: The new iphone must be necessary for any of this deal to make sense. If it was impulse bought because of this financing offer, then the financing has cost you >$1k
  - AdamJacobMuller 4y ago
    Apple does it as well, for all(?) of their products now. no interest 12/24 month payment tied to apple card.
  - mixmastamyk 4y ago
    One often forgotten problem is the poor security of carriers. If they have all your financial details for credit purposes they will be leaked.
  - yamtaddle 4y ago
    Last I checked, my carrier (T-Mobile) charges like 10% more than Apple for the same device. They're just baking the interest into the price, it's not really "no interest". Maybe the others don't do that, though, I dunno.
hot_gril 4y ago
The lesson I taught myself is to amortize everything so it's thought of as $/time. An upfront purchase has an opportunity cost. Also, most people can't pay for a house upfront. Mortgages are effectively govt-subsidized, so you usually want one anyway. I directly care what the house will cost me per month, and the bid price is only part of that.
gnicholas 4y ago
The interest rate on this is zero: > Apple Pay users can split purchases into four payments with zero interest and no fees
- raincole 4y ago
  It sounds suspicious tho. So who takes the risk?
  - gnicholas 4y ago
    You think Apple is lying about this? Or you think that they are hoping that you miss payments and then they (a three trillion dollar company) are going to make a material amount of money on an interest penalty?
    - raincole 4y ago
      > You think Apple is lying about this? No of course not. I'm not saying Apple is lying. > Or you think that they are hoping that you miss payments and then they (a three trillion dollar company) are going to make a material amount of money on an interest penalty? Maybe? I don't know how much banks make from this kind of thing. That "(a three trillion dollar company)" comment is so irrelevant that it's almost laughable tho. Banks are huge companies too, and they still make money from interest.
      - gnicholas 4y ago
        Yes, banks are large precisely because they make money this way. The point is that Apple makes huge amounts of money by selling tech products and services, and by having a loyal following. It would be surprising if they decided to trade some of that goodwill for a relatively (in their world) amount of cash.
  - simonswords82 4y ago
    Miss one of those interest free payments and I suspect it gets expensive very quickly.
freetinker 4y ago
It says “Apple Pay users can split purchases into four payments with zero interest and no fees.” Seems like a good deal – Apple is giving away money for free, especially given current interest rates.
- paxys 4y ago
  The BNPL industry isn't some big charity. They offer such deals to hook people in, knowing that a huge chunk of them will miss payments and then they can hit them with interest and fees.
  - danpalmer 4y ago
    Actually that's not how they make their money, and arguably is a distraction from their real money maker. https://www.bitsaboutmoney.com/archive/buy-now-pay-later/ https://www.bitsaboutmoney.com/archive/buy-now-pay-later/
    - lotsofpulp 4y ago
      Great link. But I assume Apple BNPL is not collecting 300bps extra processing fees from any and all merchants that accept Apple Pay.
  - CapmCrackaWaka 4y ago
    Exactly. However, I think a bigger advantage of this business model is that it simply sells more stuff. It’s way easier to look at your monthly take home income and justify $100 per month for 12 months than a 1 time purchase of $1200. However, the problem is when you make those justifications, it becomes easier to make 10 of those purchases and achieve a debt-income ratio of 5.0 instead of budgeting and keeping a lower debt-income ratio over time.
    - chollida1 4y ago
      > It’s way easier to look at your monthly take home income and justify $100 per month for 12 months than a 1 time purchase of $1200. I think you should note that for apple, they are splitting payments into 4 over 6 weeks. So your example wouldn't fit the discussion we're having here.
danpalmer 4y ago
I used to have this opinion, and I try to take as little debt as possible. However, I've change my opinion in recent years, and I now think it's based on a privileged position that not everyone is in. Buying a new phone today rather than once I've saved up is a luxury, but buying a replacement phone today rather than being without a phone for ~months while saving up could bring with it significant costs – making it harder to access employment, healthcare, or to socialise. Similar examples would be things like car repairs. Cash flow is worth something, businesses have known this forever, and people living paycheck to paycheck are typically experts in how to make their money work as well as possible because they're so close to the edge. I trust them that if they think this is the best option for them, it probably is. Payday loans are in the same category here (and businesses call them "commercial paper"). Now, I'd love to live in a society where this isn't necessary, but that's not the world we live in, so I'm in favour of these things being available for those who need them.
- SoftTalker 4y ago
  A more practical version of this rule is "don't use long term debt to pay for short-term expenses" When buying a car, or house, or maybe something like a phone that you will use continuously for a number of years, you can make an argument that it's OK to pay for that item over the same time period. Where people get into more trouble is buying consumable stuff like clothes, food, etc. on to a credit card that they don't pay off every month, and then they end up paying for a box of macaroni or package of underwear over many years (at typically double-digit interest rates).
  - mixmastamyk 4y ago
    Yes, goal should be to use debt to buy appreciating assets, not depreciating ones.
    - SoftTalker 4y ago
      Of the things most people buy, only houses really fall into that category, and even that is not guaranteed. Cars depreciate at a frightening rate.
mateus1 4y ago
I agree in spirit but buying things in installments is just a reality here in Brazil and in a lot of other countries. It's a loan like any other. When used correctly it can be a democratizing function for people who are poor but need important things like phones, fridges, and stoves.
thesuperbigfrog 4y ago
>> Honestly a bit disappointing to see this from Apple. They can't raise prices on the latest iGoodies if no one can afford to buy them. Buy Now Pay Later can ensure users "can afford" the latest iGoodies instead of having to wait for the price drops on not-the-newest iGoodies. They are being innovative and enabling their own business to succeed despite the current economic conditions.
- aeontech 4y ago
  This is probably sarcasm, but, financing for iGoodies has been available for years. That's not what this feature is :)

paxys 4y ago

Exactly. Taking a 15-30 year loan to buy a house makes sense. Using Affirm or Klarna or Apple Pay Later to buy groceries or a new laptop does not.

deleted 4y ago
[deleted]

agentdrtran 4y ago

If your laptop breaks and you need a new one you are probably better off doing BNPL if you can instead of buying a cheap, crappy one now.

raincole 4y ago
Well it's actually boiled down to if you make money with your laptop. I guess most people on HN are programmers so of course they do. But the question is not good laptop vs crappy laptop, it's consumption vs investment.
- Jcowell 4y ago
  What do you’re a student in uni? Averagely, Your laptop won’t make any money until you graduate , get a job , and pay off your loans.

Aaronstotle 4y ago

I initially purchased my new iphone 12 in monthly installments, yes I could have paid for it outright, but I didn't see the point in paying ~1k upfront.

kimbernator 4y ago
If you're referring to a carrier's zero interest payments on the full price of the phone, that's just smart. No penalty for borrowing. If there was interest involved, it gets fuzzier. I'll amend this by saying that there's also another huge requirement for it to make sense: The new iphone must be necessary for any of this deal to make sense. If it was impulse bought because of this financing offer, then the financing has cost you >$1k
- AdamJacobMuller 4y ago
  Apple does it as well, for all(?) of their products now. no interest 12/24 month payment tied to apple card.
- mixmastamyk 4y ago
  One often forgotten problem is the poor security of carriers. If they have all your financial details for credit purposes they will be leaked.
- yamtaddle 4y ago
  Last I checked, my carrier (T-Mobile) charges like 10% more than Apple for the same device. They're just baking the interest into the price, it's not really "no interest". Maybe the others don't do that, though, I dunno.

hot_gril 4y ago

The lesson I taught myself is to amortize everything so it's thought of as $/time. An upfront purchase has an opportunity cost. Also, most people can't pay for a house upfront. Mortgages are effectively govt-subsidized, so you usually want one anyway. I directly care what the house will cost me per month, and the bid price is only part of that.

gnicholas 4y ago

The interest rate on this is zero: > Apple Pay users can split purchases into four payments with zero interest and no fees

raincole 4y ago
It sounds suspicious tho. So who takes the risk?
- gnicholas 4y ago
  You think Apple is lying about this? Or you think that they are hoping that you miss payments and then they (a three trillion dollar company) are going to make a material amount of money on an interest penalty?
  - raincole 4y ago
    > You think Apple is lying about this? No of course not. I'm not saying Apple is lying. > Or you think that they are hoping that you miss payments and then they (a three trillion dollar company) are going to make a material amount of money on an interest penalty? Maybe? I don't know how much banks make from this kind of thing. That "(a three trillion dollar company)" comment is so irrelevant that it's almost laughable tho. Banks are huge companies too, and they still make money from interest.
    - gnicholas 4y ago
      Yes, banks are large precisely because they make money this way. The point is that Apple makes huge amounts of money by selling tech products and services, and by having a loyal following. It would be surprising if they decided to trade some of that goodwill for a relatively (in their world) amount of cash.
- simonswords82 4y ago
  Miss one of those interest free payments and I suspect it gets expensive very quickly.

freetinker 4y ago

It says “Apple Pay users can split purchases into four payments with zero interest and no fees.” Seems like a good deal – Apple is giving away money for free, especially given current interest rates.

paxys 4y ago
The BNPL industry isn't some big charity. They offer such deals to hook people in, knowing that a huge chunk of them will miss payments and then they can hit them with interest and fees.
- danpalmer 4y ago
  Actually that's not how they make their money, and arguably is a distraction from their real money maker. https://www.bitsaboutmoney.com/archive/buy-now-pay-later/ https://www.bitsaboutmoney.com/archive/buy-now-pay-later/
  - lotsofpulp 4y ago
    Great link. But I assume Apple BNPL is not collecting 300bps extra processing fees from any and all merchants that accept Apple Pay.
- CapmCrackaWaka 4y ago
  Exactly. However, I think a bigger advantage of this business model is that it simply sells more stuff. It’s way easier to look at your monthly take home income and justify $100 per month for 12 months than a 1 time purchase of $1200. However, the problem is when you make those justifications, it becomes easier to make 10 of those purchases and achieve a debt-income ratio of 5.0 instead of budgeting and keeping a lower debt-income ratio over time.
  - chollida1 4y ago
    > It’s way easier to look at your monthly take home income and justify $100 per month for 12 months than a 1 time purchase of $1200. I think you should note that for apple, they are splitting payments into 4 over 6 weeks. So your example wouldn't fit the discussion we're having here.

danpalmer 4y ago

I used to have this opinion, and I try to take as little debt as possible. However, I've change my opinion in recent years, and I now think it's based on a privileged position that not everyone is in. Buying a new phone today rather than once I've saved up is a luxury, but buying a replacement phone today rather than being without a phone for ~months while saving up could bring with it significant costs – making it harder to access employment, healthcare, or to socialise. Similar examples would be things like car repairs. Cash flow is worth something, businesses have known this forever, and people living paycheck to paycheck are typically experts in how to make their money work as well as possible because they're so close to the edge. I trust them that if they think this is the best option for them, it probably is. Payday loans are in the same category here (and businesses call them "commercial paper"). Now, I'd love to live in a society where this isn't necessary, but that's not the world we live in, so I'm in favour of these things being available for those who need them.

SoftTalker 4y ago
A more practical version of this rule is "don't use long term debt to pay for short-term expenses" When buying a car, or house, or maybe something like a phone that you will use continuously for a number of years, you can make an argument that it's OK to pay for that item over the same time period. Where people get into more trouble is buying consumable stuff like clothes, food, etc. on to a credit card that they don't pay off every month, and then they end up paying for a box of macaroni or package of underwear over many years (at typically double-digit interest rates).
- mixmastamyk 4y ago
  Yes, goal should be to use debt to buy appreciating assets, not depreciating ones.
  - SoftTalker 4y ago
    Of the things most people buy, only houses really fall into that category, and even that is not guaranteed. Cars depreciate at a frightening rate.

mateus1 4y ago

I agree in spirit but buying things in installments is just a reality here in Brazil and in a lot of other countries. It's a loan like any other. When used correctly it can be a democratizing function for people who are poor but need important things like phones, fridges, and stoves.

thesuperbigfrog 4y ago

>> Honestly a bit disappointing to see this from Apple. They can't raise prices on the latest iGoodies if no one can afford to buy them. Buy Now Pay Later can ensure users "can afford" the latest iGoodies instead of having to wait for the price drops on not-the-newest iGoodies. They are being innovative and enabling their own business to succeed despite the current economic conditions.

aeontech 4y ago
This is probably sarcasm, but, financing for iGoodies has been available for years. That's not what this feature is :)