Buy now, pay later. This purchase arrangement can be found for everything from electronics to jewelry. Walk out of the store or dealership with your merchandise without having to plop down a pile of money. Sounds pretty enticing, but be sure to check out these 7 Things That You Need To Know About Buy Now, Pay Later.
1. It is entirely possible for you to still be paying for a purchase long after it is worn out and no longer useful. Think clothing, electronics, and decorative household items for example.
2. Buy now, pay later does not necessarily mean no money down. Some businesses charge an application or set-up fee to enroll you in the deferred payment plan for your purchase. This charge will be tacked on top of the purchase price.
3. You may be racking up interest on anything that you buy now and pay later for unless you pay it off in full before the first deferred payment comes due. A common misunderstanding is that these types of plans do not start calculating interest on the balance until the first payment is due. Often wrong, so check the fine print.
Also, be aware that the interest rates for these types of payment plans are generally quite steep. If you miss payments, the rates can skyrocket even higher.
4.With buy now, pay later, the temptation to splurge on unnecessary items is high. You can get this great, new, shiny gadget now without the immediate financial cost to go with it. Kinda like kicking the can of responsibility down the road. It is so easy to commit when you do not feel the money pinch to go along with it.
5. By deferring payment, you run the risk of not having the funds that you need to settle up on your purchase when the time comes. Things put off are often forgotten. Also, banking on having access to money later if you do not have it available now is not a wise strategy. You have no idea, good or bad, what life events could come your way down the line.
6. You may lock yourself into a nonrefundable purchase by taking part in a buy now, pay later plan. For example, I found an amusement park that makes cancellation of season tickets bought by deferred payment prohibited. Once you order your tickets, you are on the hook.
7. Businesses may sell or transfer your payment plan to some other entity to maintain and collect payments from you. The retailer that you bought the merchandise from to begin with may be great to deal with, but who knows about the company that they may transfer your account to for payment service.
Overall, it is wise to be very caution about entering into any buy now, pay later payment plan. The vast majority of the time, it is far better to set money aside each month until you can pay in full in exchange for the merchandise.
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