Why more buyers are trying to pay ‘buy now, pay later’ credits

The most clear customers have problems to repay “Buy now, pay later, the short-term lenders said this week. Unveiling corresponded with reports from Lending Bank and Lendingtree, which mentioned an increasing part of all â € œbuy now, pay users later saying they had fallen back into payments.

Late or lost installments are a sign of fraud financial health between a segment of the American population, some analysts say, as the nation’s general debt grows in a record of $ 18.2 trillion and the Trump administration moves to collect in federal student loans.

Buyers who choose to buy financially through BNPL services tend to be younger than the average consumer, and a study by the federal reserve last year said that black and Hispanic women were particularly likely to use plans, which customers of all income are growing.

â € œHite BNPL provides loans to financially vulnerable customers, these customers can be evenly excessive topics, – writes the authors of the Federal Reserve study. “This concern is in line with previous research that has shown that consumers spend more when BNPL is offered when controlling, and that BNPP use leads to an increase in overdue tariffs and credit card interests and tariffs.

As Klarna grows its user base and income, the Swedish company said its first quarter losses increased 17% compared to January-March last year, to $ 136 million.

A spokesman for the company said in a state that the growth mainly reflected the largest number of credits Clarna made year by year. The percentage of its loans at a global level that went unpaid in the first trimester increased from 0.51% to 2024 to 0.54% this year, and the company sees â € œno sign of a weakened American consumer, ”he said.

More customers are using â € ˜buy now, pay later – plans

Buy now, pay later plans in general, allow customers to divide payments for purchases into four or fewer installments, often with a low cash register. Loans are usually marketed as zero interest, and most do not require credit check or a soft credit check.

BNPL providers promote plans as a safer alternative to traditional credit cards when interest rates are high. The popularity of delayed payments and ways of expansion that clients can use have also sparked public attention.

When Klarna announced a partnership with doordash in March, news led to internet comments about Americans who received credit to buy food for receipt. Similar skepticism emerged when Billboard revealed that more than half of Coachella’s attendees used installment plans to finance their tickets at the music festival.

An April report from LendingTree said about four in ten purchasing users now, the payment of subsequent plans said they had made subsequent payments in the past year, from one to three in the past year. According to a Maji report by banking, about one in four credit users chose them because they were easy to obtain than traditional credit cards.

The six BNPPL’s ​​largest providers – Afterpay, Afterpay, Klarna, Paypal, Sezle and ZIP – originated about $ 277.3 million for $ 33.8 billion in goods in 2022, or a sum of about 1% of the financial protection of the Credit Card.

An industry that is coming under a less regulatory control

The Federal Agency said that this month it did not intend to implement a Biden era regulation that was created to establish more boundaries on Fintech lender.

Treated Purchase Rule, Free Credit, such as traditional credit cards under the act of lending to the truth, requiring disclosure, refund processing, an official dispute process and other protection.

The regulation, which came into force last year, also prohibited the borrower from being forced to pay automatic or to be charged with numerous fees for the same lost payment.

The Trump administration said its non -prohibited decision came about the interest of foot resources to support US diligent taxpayers and that it would be â â â € œTais to maintain the implementation and supervision of its resources focused on the hustle of consumer threats, especially services. Veterans.â €

Consumer lawyers claim that without federal supervision, clients seeking refunds or in search of clear information about BNPL tariff structures and interest rates will have less legal recognition.

There are risks to get installment loans

Industry observers point to customers who receive credit they can allow to afford to pay as a high risk of using BNPL. Without credit offices keep track of new loan form, there are fewer safeguards and fewer oversight.

Justine Farrell, Chairman of the Knauss Business Department of San Diego University Business School, said that when consumers are ARI.

“Financial positions” consumers feel more widespread than they have in a long time, “said Farrell, who studies consumer behavior and BNPL services. COS € COSS The cost of food is continuing to increase, at the top of the rent and other goods … so consumers are taking advantage of the ability to pay for later items.â €

The American Consumer Federation and other supervision organizations have expressed concern about the return of BNPL regulation as the use of loans continues to increase.

“Taking a sandy -headed approach to the new Fintech loan universe, the new CFPB is once again favorable language at the expense of everyday people,” said Adam Rust, director of financial services in the American Consumer Federation.