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Introduction
“Get it now, pay later!” – sounds tempting, right?
That’s exactly what BNPL (Buy Now Pay Later) apps promise. From shopping on Amazon to ordering food on Zomato, you’ll often see an option: “Pay Later with Paytm, Simpl, Lazypay, Amazon Pay Later, or Flipkart Pay Later.”
For young people, especially students and first-jobbers, BNPL feels like a blessing—you don’t need a credit card, and you can still shop without paying upfront. But here’s the reality: BNPL is like a loan in disguise.
If you don’t understand how it works, you might end up paying hidden charges, late fees, and even damaging your credit score.
Let’s break it down.
What is BNPL (Buy Now Pay Later)?
BNPL is a type of short-term credit offered by fintech apps and e-commerce companies.
- You buy something today (clothes, electronics, groceries, etc.).
- Instead of paying immediately, the BNPL provider pays the seller on your behalf.
- You repay the BNPL provider later (interest-free for a limited period, usually 15–30 days).
Popular BNPL Apps in India:
- Simpl
- Lazypay
- Amazon Pay Later
- Flipkart Pay Later
- Paytm Postpaid
- ZestMoney
👉 Think of BNPL as a mini loan facility without a credit card.
How Does BNPL Work? (Step by Step)
- You sign up on a BNPL app or enable it on your shopping app.
- The app checks your creditworthiness (via CIBIL/credit bureau).
- You’re given a spending limit (e.g., ₹5,000 to ₹60,000).
- You shop using this credit.
- At the end of the billing cycle, you repay the full amount.
- If you miss repayment, late fees + penalties kick in.
Why People Love BNPL
- No Credit Card Needed – Great for students and first-time earners.
- Instant Approval – No long paperwork or bank visits.
- Interest-Free Period – Usually 15–30 days if you pay on time.
- Convenience – Available on shopping, travel, food delivery apps.
- Boosts Spending Power – You can buy things now and manage your cash flow later.
Sounds perfect, right? Well, here’s the flip side.
The Hidden Risks of BNPL
1. Late Fees and Penalties
- BNPL is interest-free only if you repay on time.
- Miss the due date? Late fees can be ₹200–₹1,000+, sometimes higher than credit card charges.
2. Hidden Charges
- Some BNPL providers charge processing fees on big-ticket purchases.
- If you convert BNPL into EMIs, interest rates can go up to 24–36% per year.
3. Credit Score Impact
- Many users don’t realize BNPL is reported to credit bureaus like CIBIL.
- If you miss payments, your credit score drops, which affects your ability to get loans in the future.
4. Overspending Habit
- Since it feels like “free money,” people end up buying unnecessary things.
- Small spends add up—suddenly, you have a ₹10,000 bill at the end of the month.
5. Aggressive Recovery Calls
- If you default, BNPL companies may use harsh recovery tactics.
- This can create unnecessary stress.
Real-Life Example
Ravi, a 24-year-old student, signed up for Simpl and started ordering food and groceries. His bill reached ₹6,000 in one month. Since he didn’t have enough money to pay on time, he delayed repayment.
Result?
- He was charged ₹700 as late fees.
- His CIBIL score dropped by 40 points.
- Next time, he struggled to get a personal loan.
👉 Lesson: BNPL is convenient but dangerous if misused.
BNPL vs Credit Card – Which is Better?
| Feature | BNPL | Credit Card |
|---|---|---|
| Approval | Easy, no income proof required | Harder, requires income/stability |
| Credit Limit | Low (₹5k–₹60k) | Higher (₹50k–₹5 lakh+) |
| Interest-Free Period | 15–30 days | 45–55 days |
| Late Fees | Very high | High, but more flexible |
| Credit Score Impact | Yes | Yes |
| Rewards | None/minimal | Cashback, points, offers |
👉 If used smartly, credit cards are actually safer and more rewarding.
Tips to Use BNPL Safely
- Treat BNPL like real money – Don’t spend more than you actually have.
- Pay on time – Mark due dates on your phone.
- Don’t use multiple BNPL apps – Easy to lose track.
- Avoid EMI conversions – Interest rates are very high.
- Check statements carefully – Look out for hidden charges.
FAQs
Q1. Does BNPL affect my CIBIL score?
👉 Yes. Timely payments improve your score, delays hurt it.
Q2. Is BNPL safe to use?
👉 Safe if used wisely and paid on time. Risky if you overspend.
Q3. Can I use BNPL for emergency loans?
👉 Not recommended—better use a personal loan or credit card.
Q4. Which BNPL app is best?
👉 Depends on your usage:
- Amazon/Flipkart Pay Later for shopping.
- Simpl/Lazypay for food and daily spends.
Final Thoughts
BNPL apps are like double-edged swords. Used responsibly, they can help manage short-term cash flow without a credit card. But if misused, they can trap you in debt, hurt your credit score, and cost you more than you imagine.
Golden Rule:
👉 If you don’t have the money to repay, don’t use BNPL.
At the end of the day, financial freedom is about spending within your means, not borrowing for things you don’t need.