this post was submitted on 25 May 2025
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A Boring Dystopia

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I got that debt in me (slrpnk.net)
submitted 4 days ago* (last edited 21 hours ago) by ByteOnBikes@slrpnk.net to c/aboringdystopia@lemmy.world
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[–] LilB0kChoy@lemm.ee -5 points 4 days ago (2 children)

Now ofc there's caveats, like everything there's nuance. Like every other type of credit, whether it's complimentary to your finances or devastating to it depends on your impulse control, financial literacy, planning and reasons for using that credit.

That's a lot of words to say don't spend money you don't have.

[–] Kecessa@sh.itjust.works 4 points 4 days ago (1 children)

If you take the time to read what they're saying it's actually 100% logical to spend money you don't have in some cases.

Ex: getting a new mortgage on a house that's paid for in the middle of COVID while interest rates are super low to invest it at a higher % than the mortgage.

[–] LilB0kChoy@lemm.ee 4 points 4 days ago

Your example isn't equivalent. BNPL does not require collateral. BNPL is, in general, predatory. Some people may take advantage of it the way OP described but they're the exception, not the rule.

That's why there are articles like this, and this and this.

[–] cm0002@lemmy.world 1 points 4 days ago (1 children)

Again, nuance, you can take out debt for money "you don't have" as long as you can comfortably afford it

My 500 in savings was an example, but if you didn't have that saved up, there's nothing wrong with putting it on BNPL because again, there's typically no interest.

Functionally, there's not a whole lot of difference between splitting it into 4 125$ payments on your paychecks, or stashing 125$ from each paycheck to savings.

Biggest difference is committal, one way you are committed to paying that 125, the other you can skip if you need to (though there are BNPL services that do allow you to "skip" (read: defer) a payment without penalty) But again that goes back to an individuals financial literacy, planning, impulse control and security that you'll have your job the whole time

[–] LilB0kChoy@lemm.ee 5 points 4 days ago (1 children)

as long as you can comfortably afford it

That's not who BNPL targets.

Functionally, there's not a whole lot of difference between splitting it into 4 125$ payments on your paychecks, or stashing 125$ from each paycheck to savings.

There is, though. Spending the $500 you have in savings is an even exchange. Money for goods/services.

Spending money you don't have through BNPL means you're exchanging a 'promise to pay' or an IOU for goods and services. What happens if you don't pay on time? How much more than the actual purchase price will it cost?

[–] cm0002@lemmy.world 0 points 4 days ago (1 children)

That's not who BNPL targets.

My comment has nothing to do with who they target, just how you can properly take advantage of said service.

There is, though. Spending the $500 you have in savings is an even exchange. Money for goods/services.

Spending money you don't have through BNPL means you're exchanging a 'promise to pay' or an IOU for goods and services. What happens if you don't pay on time? How much more than the actual purchase price will it cost?

You need to re-read my comment again, I covered that already

As far as what happens if you don't pay, well, the exact same thing that happens when you don't make payments on any other type of credit

Except it's better than other predatory practices such as "Title Loans" because it's unsecured. So worst case scenario, your credit gets dinged for a while and you got to deal with debt collectors. That's a far cry from having your car repossessed or foreclosed on your home

[–] LilB0kChoy@lemm.ee 1 points 3 days ago

This will be my last response to you, you clearly didn't even read the articles I linked. Who BNPL targets is directly related to the part of your original comment I replied to and the conventional wisdom of not spending money you don't have. Here's the relevant information from the article:

Credit score gives an indication of how disciplined a borrower has been in repaying his/her loans. Most traditional lenders like banks and non-banking finance companies (NBFCs) rely on credit score data before approving a conventional loan or credit line to a borrower. However, New-To-Credit (NTC) are those prospective borrowers who have never taken a loan, or any other credit line, hence, do not have any credit history that a lender can assess. So, for such borrowers the propensity to avail a credit option like BNPL remains higher and this is the reason they are the focus segment of BNPL lenders.

Most of these are either young consumers or people who do not have any formal credit line like credit cards or EMI cards for making payments. This is the reason why this group is most vulnerable to adverse impact of default on any new credit because of being unfamiliar with credit and the consequences of default. So, if you belong to this group you need to make sure you do not default on the payments if you opt for a BNPL scheme to make a purchase. Repayment of BNPL is tracked and reported to the credit bureau

BNPL offers short term credit through credit free period ranging from 15 days to 45 days after which the borrowers are required to pay the entire due amount. If you think that it's a small credit and hence any default will not have any consequences, then you are wrong.

Similar to any formal credit like a loan or credit card, the repayment track record of all borrowers using BNPL is reported to the credit bureaus. "BNPL which are offered in partnership with Banks and NBFCs. are reported to credit bureaus and repayment behaviour of the same impacts bureau score," says Anurag Sinha, Cofounder & CEO, OneScore, a credit score management platform. So, any complacency in terms of default may stick to your credit history which would not only bring down your credit score but could raise the cost of future credit steeply and in worst case it may also prevent you from accessing credit in the future.

While many traditional lenders may reject the borrowers who have low credit score, the chances of such borrowers getting credit through BNPL is higher because BNPL players depend on their internal assessment besides the credit score.

"Given the segment we target (lower income and self-employed), these households are often susceptible to disruptions in income that results in poor credit profile. These borrowers are not inherently risky and a lender needs to offer a product that is flexible from a repayment standpoint to ensure it is of maximum relevance. If the product is constructed the right way - these customers find it easy to manage their repayments," says Vishwanathan.

You want to talk about "how you can properly take advantage of said service" but in your example the only way to take advantage is if you already have the money. Spending money in a BNPL scheme when you don't increases your risk exponentially and one missed payment, one default, can follow you on your credit for years. This is why it's both relevant who BNPL is targeted towards and why "not spending money you don't have" is the best advice to give anyone about ANY credit scheme.