Buy Now Pay Later (BNPL) is a flexible and convenient financing option for those who want to buy the latest smartphone without burning a hole in their pocket. This scheme allows buyers to select a phone and pay for the gadget later. It does not require a deposit and has no interest rate or hidden fees. Understanding how it works and its pros and cons can help one see if BNPL would work for them.

BNPL process
When one signs up for and creates a BNPL account, they can check their eligibility and instantly get the cell phone or other consumer durable and pay for it in instalments. One pays in instalments for the purchase over time and makes no upfront payment. The money for the instalment is deducted from one’s account, which needs adequate funds to cover the instalment amount. In most cases, the purchase is paid off in a few weeks. With BNPL, one does not pay interest but is charged fees if a payment is missed. In addition, one may also be charged account-keeping fees or establishment fees, which vary from one provider to another. To sign up for BNPL, one will have to provide certain details to the financing company, like name, date of birth, address, some identification documents, and bank details.

BNPL is an excellent option for short-term financing, especially for those who are cash-strapped now but expect to have more funds in the future. These schemes include warranties and are known for their affordable instalments, which can be weekly, every fortnight, or monthly.

Tips to choose a good BNPL phone scheme
One should remember a few things while choosing a BNPL scheme for owning a phone.

• Research the cell phones thoroughly to choose the one that best suits one’s needs. Ensure the chosen cell phone is compatible with the current or preferred network provider.
• Check which type of payment timeline works best; weekly, fortnightly, or monthly.
• Before signing up, read the provider’s privacy policy to learn about fees, payment structure, and liabilities. This is usually easily available on the provider’s official website.
• Applying for a BNPL plan does not automatically make one eligible for it. One will still have to go through an approval process, and some schemes may require an initial deposit to ensure the first instalment is smooth. All these rules are usually given in terms and conditions, which one must read thoroughly.
• Some providers may charge additional fees, such as account-keeping or payment processing fees. So, it is important to be aware of all potential costs.
• Look at the frequency and duration of repayments. Common schedules are weekly, fortnightly, and monthly.
• Some BNPL providers perform credit checks, while others do not. Before applying for approval, it is advised to understand the impact on one’s credit score and check it for themselves.
• In some cases, the provider may also request income verification. So, it’s best to be prepared to provide proof of income or employment details during the application process. To be eligible for BNPL, one must also be at least 18 years of age and have a valid ID. One must also show a stable income on paper.
• One should automate payments. They can either set a reminder or automate the repayments. This discipline will ensure one does not get slapped with a late fee and there’s no negative impact on their credit score.
• It is important to avoid debt accumulation. Since BNPL schemes are so convenient and easy, they may entice one to rely on them too much, eventually leading to debt accumulation. To avoid this, it’s best to opt for one BNPL scheme at a time and go for another when the first one has been paid. Avoid having multiple BNPL accounts.
• BNPL providers target youngsters, so most of these providers have tie-ups with online retailers. One may be able to buy their preferred cell phone with a BNPL scheme while checking out of an online store instead of entering their credit card details.

There are several BNPL phone schemes provided by sellers on cell phones in the country. Sellers offer these schemes in partnership with BNPL services like AfterPay, Klarna, and Zip, which allow customers to own smartphones and other gadgets without down payments. Cell phone sellers like Optus and Vodafone provide these services directly. The schemes usually boast zero interest, an instalment timeframe ranging from 12 to 36 months or weeks, if customers prefer that, and even a refund option in case one returns the cell phone to the merchant.

Benefits of BNPL
1. Quick access to phone
Cell phones are a necessity today, and BNPL allows quick access to the latest and most costly gadgets, even for people with a bad credit history or low income. Breaking the cost of the cell phone into smaller, payable portions makes it more affordable and accessible. This is especially beneficial for people with low economic means.

2. Budget management
One does not need to empty the account or splurge one’s entire salary on a high-value item. BNPL helps one spread out expenses over time, which can, in turn, help with managing one’s monthly budget.

3. No impact on savings
With BNPL schemes, customers do not have to compromise on their savings, investments, or emergency funds. This can be a great advantage for youngsters who are just starting to earn.