Dangers and Benefits of Buy Now Pay Later Arrangements

We are now in 2022, and there are still many companies and facilities in Canada that offer buy now, pay later options. The reasoning behind this is that more and more people are using these types of services for purchases. However, there are also many dangers connected with buy now pay later options.

For example, consider the rising costs of living in Canada nowadays. It has become increasingly harder for Canadians to afford the rising costs of housing, groceries, clothing, and other necessities. Given that these costs are rising, it makes sense that Canadians would opt for something which they do not have to pay off the moment they make a purchase.

Benefits of Buy Now Pay Later

There are several benefits to buying now, paying later.

1. No Immediate Out Of Pocket Expense

For a lot of Canadians, having a tight budget is a must. But what happens when there is something that they so desperately need or want? Do they have enough money to pay for it outright, or do they have the option to buy now and pay later? In many cases, this means not paying any money out of pocket immediately which can be a huge relief for some people.

2. No Need To Have A Savings Account

For many, having a savings account is not necessarily realistic or feasible. This is because there are so many other expenses that need to be paid for; it is hard to put money aside just in case something happens. In this case, buying now and paying later can mean not having to set any money aside and still being able to make a purchase when needed.

3. Builds Credit Score

Even though you do not necessarily have to pay anything right away if you buy now and pay later, this does not mean that there are no consequences for your actions. In fact, in Canada, it is possible that you will still be expected to pay the money back. Your ability to do so can go a long way in establishing or building your credit score, which is why this type of arrangement may be right for you.

4. Good For Impulse Buys

For many people, it can be hard to determine whether or not they should make an impulsive buy. This is because they do not necessarily have to pay for it the right way, and some do not even have to pay anything at all. In this case, buying now and paying later gives people the freedom to make a purchase whenever they feel that it is necessary without having to wait until money can be saved up.

5. More Convenient

Another advantage to this type of arrangement is that it can be extremely convenient. It can save you time because you do not have to wait until the next payday to make a purchase. This saves you from having to worry about carrying cash on your person or even waiting in line for an hour at the cash register.

6. Instant Gratification

At the end of it all, people want their purchases. Many Canadians engage in this type of arrangement because they cannot wait to have the product they need or want right away. In some cases, you can walk out with a purchase within minutes if it is available and there are no issues with your credit history or ability to pay.

7. More Deals To Be Found

Finally, because more and more companies are now offering buy now, pay later arrangements for Canadians, you can bet that there will be more deals to be found. Sometimes these offers can even help you save money so it is important to keep an eye out for them.

Dangers of Buy Now Pay Later

Although buy now, pay later arrangements to have several benefits, they also come with some significant dangers. This is why you should always be well aware of the pros and cons before making a purchase.

1. Interest Charges Can Add Up Quickly

Interest charges are something that can easily add up very quickly when you are not prepared. The average Canadian who engages in this type of arrangement may not be fully aware of just how much interest they are paying every month until it is too late.

2. Bad Credit Can Affect Payments

Another problem that can potentially arise with buy now, pay later arrangements is if you have bad credit or no credit at all. If you do not have the ability to repay your debt on time, then you will face late charges or penalties that can be very taxing.

3. No Way To Afford It

Another problem with buy now, pay later arrangements is not having enough money to cover all of your bills by the end of the month. Many Canadians who engage in this type of arrangement are not aware of the added interest they are paying. If you do not have enough money to cover your bills by the end of the month, then you are not in much better shape because now you have debt as well.

4. Missed Payments Can Be A Big Problem

If you are not very careful, then missed payments can be a big problem. Not only will you likely experience late charges or fees with buy now, pay later arrangements but they can also go on your credit report. This will make it difficult for you to get approved for future loans and even rental properties.

5. Expensive In The Long Run

In the long run, buy now, pay later arrangements can become very expensive. This is because you may have to shell out a lot of money from your own pocket in order to settle a debt that you will not even be able to afford.

6. Put Your Savings At Risk

Not only can this type of arrangement put more stress on your finances but it can also put your savings at risk. If you live paycheck to paycheck and something unexpected comes up, then you may have no choice but to take out a loan or even withdraw money from your savings account.

Buy now, pay later arrangements are not necessarily a bad thing as long as you are aware of the dangers and can plan accordingly. We wish you a happy and prosperous 2022.