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

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

#81

Post by matwood »

Vespasian wrote: post #37
yladiz wrote: post #11

Earlier quoted context omitted.

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?

There is nothing inherently wrong with that but it's a lot more risky then saving up. Say after 10 months an unavoidable bill of $4k shows up and I got to pay it. If I'm saving up I can redirect that money. It sucks that I don't get the camera when I planned to but otherwise I'm fine. Under a BNPL plan I have no extra money to allocate and might have to dip into Credit (potentially with high interest). In short: Savi…

> There is nothing inherently wrong with that but it's a lot more risky then saving up.

Cash is king. Assuming 0% interest, it's financially better and less risky to do BNPL. This is separate from all the other financial decisions like savings, etc...

It's similar with CCs. I love my CCs and get a ton of value and free stuff by using them. I also have never carried a CC balance in 20+ years. Someone who is financially disciplined is leaving money on the table when not using CCs.

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

#82

Post by Sevii »

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…

The issue is that financing changes what is available in the marketplace for you to buy. There are cheap new cars that don't break down every year (ex. toyota hilux) that are not sold in the US. Because it's more profitable to finance you a 50k truck than a 20k truck.

The housing market works the same. If we didn't standardize fixed rate mortgages houses would be cheaper smaller and more available.

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

#83

Post by __s »

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…

See the SNL skit: Don't Buy Stuff https://www.youtube.com/watch?v=R3ZJKN_5M44 which advertises a self help financial book whose contents are "If you don't have the money, don't buy it"

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

#84

Post by [deleted] »

mozman wrote: post #72
yladiz wrote: post #11

Earlier quoted context omitted.

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.

[deleted]

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

#85

Post by neon_electro »

mozman wrote: post #72
yladiz wrote: post #11

Earlier quoted context omitted.

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.

Well said, but I feel like practicing your first sentence makes it relatively easy to be good at avoiding the mental trap you describe.

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

#86

Post by sbuccini »

ceejayoz wrote: post #76
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 o…

Your claims are not true for several reasons:

- Whenever you see a BNPL offer for 0% it means the merchant is paying the interest on behalf of the consumer. The merchants are in charge of making that decision, not Affirm. Affirm earns interest on every loan. Many merchants choose to assume that cost because it greatly increases conversion rates. Replies to my comment only confirm this fact (“I only ever used BNPL cause I got 0%!”)

- "attractiveness" is in the eye of the beholder. You may be unwilling to pay a fee, many other people are. Plenty of people roll over their CC balances each month and pay even higher APRs.

- Interest rates have little effect on BNPL financing; many can either lend out of their bank account due to their size, or they sell the loans immediately upon origination and thus pass the risk of changing interest rate environments onto another party.

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

#87

Post by tarotuser »

What happens if you agree to a BNPL but you BNDP (buy now, dont pay): https://www.consumerfinance.gov/ask-cfpb/what-happens-if-i-c...

Hidden costs of BNPLs: https://slate.com/technology/2022/11/buy-now-pay-later-hidde...

"I’m sure you’ve read a ton of stories that Gen Z is using “buy now, pay later,” all the time. The most recent Consumer Financial Protection Bureau pointed out that actually the biggest age cohort for “buy now, pay later” users are people ages 34–40. They’re millennials."

People with low/no credit are usually denied.

NYTimes article about downsides of BNPLs: https://www.nytimes.com/2022/12/29/your-money/buy-now-pay-la...

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

#88

Post by havblue »

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…

The fast fashion debate is similar to this. People who are against it say that it's environmental unsustainable and expensive to buy new clothes more frequently. People who like fast fashion respond that it's only rich people who have the luxury to buy durable, high quality clothing that lasts more than a season.

The pro fast fashion argument is that they have no choice. The reality is likely that they just like buying new clothes from these stores more frequently and can easily come up with a justification.

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

#89

Post by onlyrealcuzzo »

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…

> realistically it's functionally no different than a credit card.

> There are real issues with BNPL, mostly extremely loose underwriting in the pursuit of growth.

It's a cc with bad underwriting...

You don't see this as a fundamental problem?

This doesn't seem much different to me than other sub-prime bubbles...

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

#90

Post by emptysongglass »

sbuccini wrote: post #86
ceejayoz wrote: post #76

Earlier quoted context omitted.

> 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 o…

Your claims are not true for several reasons: - Whenever you see a BNPL offer for 0% it means the merchant is paying the interest on behalf of the consumer. The merchants are in charge of making that decision, not Affirm. Affirm earns interest on every loan. Many merchants choose to assume that cost because it greatly increases conversion rates. Replies to my comment only confirm this fact (“I only ever used BNPL cau…

I don't think you make a convincing argument. Anecdotally, I've only ever used Affirm when they offer me 0% interest. Paying 26% or more for a soundbar over six months is not attractive.
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