Additionally, to note that while Buy Now, Pay Later can be used for extravagant expenses, it can also be used to bridge the gap in between pay checks for groceries or to make needed repairs to a home.
NPL is most popular among younger people and can be used for a wide array of purchases. Yet, no matter what the purchase is used for, a large majority of BNPL users end up being charged on top of the purchase with late payments and fees.
BNPL can be a tool to stretch the budget, which is why it is not surprising that regrets are common among users after struggling with late payments. Important stats to look at when taking a deeper dive into who is most likely to have paid late:
- Parents with kids younger than 18 are among the most likely BNPL users to have paid late (49%)
- Gen Zers ages 18 to 26 (45%)
- Millennials ages 27 to 42 (45%)
- Borrowers making $100,000 or more a year (45%)
The numbers do not lie, and neither do the late loan payments on credit lines. With a diverse crowd of prominent late payments, reasoning asks “Why use BNPL”?
Buy now, pay later can be beneficial in a tight spot, they’re fast to get, predictable with breakdowns of payments (pay-in-four), and often interest free. When a customer is surprised by the total payment needed (and who isn’t in the time of 2023 with high inflation rates), BNPL offers a lesser amount at the point-of-sale to ease the consumer’s mind. What seems like an easy fix for a sticky situation can lead to quickly stacking up “paying later” when the time comes, making it difficult to pay back.
Additionally, these types of trade lines are not credit reported, which may be a reason they are becoming a preferred payment method. On the lender side, without the credit report feature for this product, traditional lenders do not get a clear picture of what customers may owe. This creates a confusing and ever-changing landscape with loan repayments.
After combing through the statistics, we stress the importance of a robust digital communications strategy when outreaching these clients. They are tech savvy individuals who may or may not know the conditions of the payment — just that it made their purchase more manageable at the time.
If your business needs assistance in how to better communicate with your consumer about paying back their BNPL obligations, Quanta Credit Services can help. We offer 3 different packages, custom digital creatives, and a team that will help elevate your collection services.