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Buy now, pay later gives you a third payment option

When you want to make a larger purchase such as an HD TV or a sofa, there are two options that come to mind: cash/debit or credit. However, more and more retailers are offering a third way to buy. Buy now, pay later is not the same as purchasing with credit. If a retailer offers this option, you can make a purchase and pay in installments with no interest accruing.

How does buy now, pay later work?

Buy now, pay later is a purchasing option that the consumer gets at checkout. In some ways, it’s a hybrid of paying in full and using credit. Typically, the buyer gets to break up the responsibility of paying for an item over a designated period of time in equal installments. The advantage is most buy now, pay later options don’t charge interest, so the consumer can more easily fit purchases into their budget with no additional fees.

If the buyer chooses a buy now, pay later plan, they must fill out a short application and provide a payment method. Approval or denial happens almost instantly.

Will buy now, pay later affect my credit score?

A soft credit check is all you need to be approved for a buy now, pay later purchasing option. This type of activity does not appear on a credit report. This means a buy now, pay later application won’t harm your credit score. On the flip side, you can’t build up good credit by paying off these types of purchases, either.

What happens if I miss a payment?

If you don’t meet the minimum requirements of the purchasing agreement, the typical penalty is being charged a late fee. You also might get hit with interest, have your purchasing limits lowered or have your account put on hold, which means you cannot make any other buy now, pay later purchases.

Retailers that offer buy now, pay later options

There are two ways a retailer typically partakes in a buy now, pay later option. Most often, the retailer partners with another service, such as Affirm, Afterpay, Klarna or PayPal. A few retailers, such as Best Buy, offer their own version of the service.

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If you’d like to buy now, pay later at Amazon, you can do it through Affirm. For instance, instead of paying $149.99 for an Amazon Fire HD 10 tablet, you can get it with five monthly payments of $30.

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Best Buy

If you wanted to buy the Sauder Acadia Way 2-Drawer Lateral File Cabinet at Best Buy but didn’t have $344.99 available, you could choose the 12-month option and pay just $28.75 per month for one year.

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Dick’s Sporting Goods

When you shop at Dick’s Sporting Goods, all you have to do is select Afterpay at checkout to take advantage of buy now, pay later. For example, the Lifetime 50-Inch All-Star Portable Basketball Hoop is currently available for $349.99. However, with Afterpay, you can get it in four interest-free payments of $87.50.

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Home Depot

The impressive Roomba i3+ EVO costs $549.99 at Home Depot. But if that doesn’t fit your finances, you can get it in six monthly payments of $92. While this option costs a couple of dollars more, it’s much more cost-effective than putting it on your charge card.

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If you sign up for Klarna, you can get great treats like a men’s Under Armour Rival fleece in four small payments that your budget won’t even notice.

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The Project 62 Esters Wood Armchair is a beautiful piece of furniture that you can get at Target. It costs $300. However, if that puts a strain on your budget, you can get it for as low as $28 per month through the retailer’s partnership with Affirm.

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At Wayfair, you can use either Afterpay or Klarna and get your purchase right away while paying for it in four biweekly interest-free installments. In other words, if you want the beautiful Chiang quilt set, instead of paying $123.99 all at once, you could pay it off over two months with no additional fees.

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Allen Foster writes for BestReviews. BestReviews has helped millions of consumers simplify their purchasing decisions, saving them time and money. 

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