The 'buy now, pay later' bubble is about to burst • Hacker News Board

Re: The 'buy now, pay later' bubble is about to burst

#71

Post by sbuccini » Fri, Jan 13, 2023, 2:36 PM UTC

I posted this before, will post again:

This article is so weak. It doesn't provide any actual reasons for why BNPL is a bubble nor why such a supposed bubble is about to burst. Seriously quotes TikTokers who are probably just paid shills for the company. There are real issues with BNPL, mostly extremely loose underwriting in the pursuit of growth, but realistically it's functionally no different than a credit card. People actually interested in this topic should look at the CFPB's recent report on the subject and at the quarterly reports for Affirm/Upstart/Square/etc.

Also, this same piece has been posted like 5 times in the past few days and only now has it hit the front page, it's definitely weird submitters want HN to read the article so badly. Flagged.

Re: The 'buy now, pay later' bubble is about to burst

#72

Post by mozman » Fri, Jan 13, 2023, 2:37 PM UTC

yladiz wrote: post #11

ivanche wrote: post #10

Earlier quoted context omitted.

If you can afford 12 payments with interest, you can by definition also afford to save for 12 months and then buy the camera. BNPL and credit card companies are masters of exploiting psychology and especially currently prevailing wusiness and entitlement ("But I want it now!!!1!", "I deserve to treat myself like a king").

Okay, I repeat my question above: if you can afford to pay over 12 months (meaning, you don't go into debt to do so), what's inherently wrong with doing it instead of waiting 12 months and paying all at once, besides ideological reasons?

Always spend other people’s money, especially at 0%. The trap is it creates a mental pattern to condition you to accept paying interest on other purchases.

Re: The 'buy now, pay later' bubble is about to burst

#73

Post by iso1631 » Fri, Jan 13, 2023, 2:38 PM UTC

ivanche wrote: post #10

yladiz wrote: post #7

Earlier quoted context omitted.

I think this is a bit too simplistic of a way to look at it. Having sone debt is not necessarily bad, even outside of enormous purchases such as a house or car. First, c'mon, people don't (directly) finance sandwiches. Have you ever seen a sandwich shop accept Klarna? If you're talking about a credit card that's something but that's not what this article is talking about, which is BNPL. Second, in general it's not as…

If you can afford 12 payments with interest, you can by definition also afford to save for 12 months and then buy the camera. BNPL and credit card companies are masters of exploiting psychology and especially currently prevailing wusiness and entitlement ("But I want it now!!!1!", "I deserve to treat myself like a king").

So I take a 10k loan out for 10 years for solar panels on my roof paying 12k in total, reducing my electric payments by 1500 a year.

You think it's better to not. OK.

Re: The 'buy now, pay later' bubble is about to burst

#74

Post by [deleted] » Fri, Jan 13, 2023, 2:38 PM UTC

dusted wrote: post #3

I don't get it.. There's a childrens song in Denmark, it's lyrics go, roughly translated "and if you have money, then you can have, but have you none, then you may go!" (it's about buying bread at the bakery).. When I see how people spend money they don't have, I'm always wondering if their parents never sang for them when they were young, or if they are of a particular dim nature. Sure, I can see why some people wou…

[deleted]

Re: The 'buy now, pay later' bubble is about to burst

#75

Post by [deleted] » Fri, Jan 13, 2023, 2:39 PM UTC

aspyct wrote: post #18

dusted wrote: post #3

I don't get it.. There's a childrens song in Denmark, it's lyrics go, roughly translated "and if you have money, then you can have, but have you none, then you may go!" (it's about buying bread at the bakery).. When I see how people spend money they don't have, I'm always wondering if their parents never sang for them when they were young, or if they are of a particular dim nature. Sure, I can see why some people wou…

I agree that it's stupid to finance everything. However some big things make sense to finance. Take your car example: I'm not rich enough to buy a car that won't break down every year (I know, I tried). However, when my car breaks down, I can't go to my clients and I lose money. In this case, it makes sense to rent out a car that's going to be working properly, and with guarantees in case it doesn't. However yes, I w…

[deleted]

Re: The 'buy now, pay later' bubble is about to burst

#76

Post by ceejayoz » Fri, Jan 13, 2023, 2:42 PM UTC

sbuccini wrote: post #71

I posted this before, will post again: This article is so weak. It doesn't provide any actual reasons for why BNPL is a bubble nor why such a supposed bubble is about to burst. Seriously quotes TikTokers who are probably just paid shills for the company. There are real issues with BNPL, mostly extremely loose underwriting in the pursuit of growth, but realistically it's functionally no different than a credit card. P…

> It doesn't provide any actual reasons for why BNPL is a bubble nor why such a supposed bubble is about to burst.

I'll provide one: it only made any significant sense in the near-zero interest rate levels we had last year. "Split it into four payments for $0 fee" is attractive. Much less so when there's a fee; Amazon's BNPL via Affirm is now up to 10-30% APR from the previous 0%.

At those rates, people just put it on a credit card.

Re: The 'buy now, pay later' bubble is about to burst

#77

Post by sidewndr46 » Fri, Jan 13, 2023, 2:43 PM UTC

yladiz wrote: post #7

dusted wrote: post #3

I don't get it.. There's a childrens song in Denmark, it's lyrics go, roughly translated "and if you have money, then you can have, but have you none, then you may go!" (it's about buying bread at the bakery).. When I see how people spend money they don't have, I'm always wondering if their parents never sang for them when they were young, or if they are of a particular dim nature. Sure, I can see why some people wou…

I think this is a bit too simplistic of a way to look at it. Having sone debt is not necessarily bad, even outside of enormous purchases such as a house or car. First, c'mon, people don't (directly) finance sandwiches. Have you ever seen a sandwich shop accept Klarna? If you're talking about a credit card that's something but that's not what this article is talking about, which is BNPL. Second, in general it's not as…

Invariably people who use that service plan to spend 100% of their monthly income. Whenever you have an unexpected expense in that 12 month time frame and have to pay for that, then you can't make the payment on that loan.

Re: The 'buy now, pay later' bubble is about to burst

#78

Post by hestefisk » Fri, Jan 13, 2023, 2:43 PM UTC

MarkusWandel wrote: post #8

"BNPL providers can offer zero-percent interest rates because they charge merchants three to four times the average credit-card processing fee." Right. And the vendor can't charge a higher price to the BNPL crowd, so they average it out over everyone. And thus the BNPL app user gets an "interest free" microloan, with everyone, even the people paying cash, having to pony up for the interest. Just like credit cards wit…

The fees to the merchant can be quite exorbitant. That’s how the BNPL operators make their money.

Re: The 'buy now, pay later' bubble is about to burst

#79

Post by yellow_postit » Fri, Jan 13, 2023, 2:44 PM UTC

Ultimatt wrote: post #35

ivanche wrote: post #10

Earlier quoted context omitted.

If you can afford 12 payments with interest, you can by definition also afford to save for 12 months and then buy the camera. BNPL and credit card companies are masters of exploiting psychology and especially currently prevailing wusiness and entitlement ("But I want it now!!!1!", "I deserve to treat myself like a king").

Or you can afford the camera outright, right now. What's better out of these options: 1) Buy for cash the camera now. You don't have any cash in hand afterwards, and the camera is depreciating in value immediately as an asset only offset by whatever you do with it. 2) Buy via BNPL with no interest for 12 months, and pay exactly a 12th a month. You have the camera, but you also have 91% of your cash in the bank that /…

Cash flow optimization is a useful skill but it’s on the fringes for sure as BNPL main revenue is from their interest.

Re: The 'buy now, pay later' bubble is about to burst

#80

Post by jfghi » Fri, Jan 13, 2023, 2:44 PM UTC

It’d potentially be a hassle, but I think perhaps by putting enough of there expenses on bnpl that one could potentially make a bit of interest thanks to the current rate environment.