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

theatlantic.com

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

#141

Post by e63f67dd-065b »

mountainriver wrote: post #123
CyanLite2 wrote: post #111

Earlier quoted context omitted.

BNPL is just a non-asset-backed sub-prime loan. We've seen this movie before and how it ends. BNPL firms can't survive a recession or higher consumer delinquencies.

Funny credit cards survive when it’s the same thing

The difference is that credit cards are not almost exclusively sub-prime loans and are reported on the consumer's credit. Many companies have largely prime or super-prime credit portfolios, and the industry is well-developed to serve these customers (Amex makes much more money from interchange than from interest, for example, and even sub-prime borrowers have tight control over their credit portfolio).

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

#142

Post by yalogin »

What is the argument against BNPL? It’s like credit cards isn’t it? Instead of borrowing from credit card companies some folks are borrowing from the BNPL companies. Is the worry that these people are over extended? Is there over exuberance in n that space and no checks on who to lend money and how much?

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

#143

Post by pharmakom »

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…

Market for lemons? How many BNPL customers don’t qualify for a good credit card?

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

#144

Post by unity1001 »

mywittyname wrote: post #102
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'll be honest with you, it sounds like you've lead a pretty sheltered life. Living in poverty is fucking hard. All around you are parasites looking to take what little you have and kick you back to the floor. Yeah, of course parents tell their kids to do better in life. But it feels like the world is conspiring against you at every step of the way. The only time anything good happens, it's due to the kindness of som…

He is in Denmark, where there is social democracy, high taxes and all encompassing social programs to protect people from the ravages of the Randian market. Of course he lived a sheltered life. But its not a fault on his side. People in countries with Randian realities not being protected from the ravages of the economy is where the fault is at.

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

#145

Post by KineticLensman »

phphphphp wrote: post #140
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…

Functionally it is substantially different to a credit card. The value of BNPL to businesses is the way that it changes the basis for a customer’s purchase decision, a credit card does not have that same dynamic. The underlying credit mechanism might be a lot like a credit card but the way borrowers interact with it, which is what matters, is very different. The mechanics of a mortgage and a car loan are very similar…

> the way borrowers interact with it, which is what matters, is very different

And the differences are?

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

#146

Post by e63f67dd-065b »

dusted wrote: post #61
Ultimatt wrote: post #35

Earlier quoted context omitted.

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 /…

I disagree, it's death by a thousand paper-cuts. Having my funds reduced to 91% the rest of the year is waaay worse for me, than having it reduced to ~0% the rest of the month. Because, the rest of that month, I'll be super-vigilant, I'll be acutely aware of why I have less money than normally, I know not to make anymore purchases, I know that this month is not for an extra treat, because I bought the other thing. Ne…

This looks like a weakness in managing your personal balance sheet. You're willingly sacrificing cash flow and interest to simply balance sheet management, which may be worth the tradeoff for some but for those of us with the required skills it's really not.

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

#147

Post by samjmck »

mywittyname wrote: post #102
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'll be honest with you, it sounds like you've lead a pretty sheltered life. Living in poverty is fucking hard. All around you are parasites looking to take what little you have and kick you back to the floor. Yeah, of course parents tell their kids to do better in life. But it feels like the world is conspiring against you at every step of the way. The only time anything good happens, it's due to the kindness of som…

To me, it sounds more like they have lived a European life, not a sheltered life. Outside of the UK, there aren’t any European countries I know of that use e.g. credit cards on a daily basis. We are taught to avoid taking on debt and are financially risk-averse.

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

#148

Post by ericpauley »

Sevii wrote: post #82
aspyct wrote: post #18

Earlier quoted context omitted.

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.

The Toyota Tacoma is pretty comparable to the international Hilux aside from powertrain (gas vs diesel) and a very small size difference. In theory you could probably get one for $30k.

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

#149

Post by sumtechguy »

nullsense wrote: post #104
matwood wrote: post #81

Earlier quoted context omitted.

> 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 financiall…

>Someone who is financially disciplined is leaving money on the table when not using CCs. The trick is knowing whether or not you're financially disciplined. And usually one finds out the hard way. It often involves a credit card or credit facility of some nature.

This here. Not everyone can do that. I personally can. I try to teach my friends and family to save a bit and use credit cards as a tool to get a small bit of free stuff. However, those things are deadly if you have no skill in saving in the first place. They will wipe you out with interest payments and then some. That method only works if you have the ability to save first and put off impulse buys. Even having something simple like a checking account can be bad if you have poor ability to balance your budget.

My wife for example does not have this ability, however I can manage it by basically controlling the amounts we have and putting restrictions on how money is spent that teach the lessons of saving that her parents for some unknown reason skipped teaching her. Lessons like 'you have X amount of cash lets save up for that thing you want' 'lets review our purchases and see if they make sense on the amount of income we have' 'yes, your friend has a need of 100 bucks and we can cover it but will giving them 100 just make them ask next time for 1000 and will it actually fix their problem or delay it?'

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

#150

Post by up2isomorphism »

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…

Weak or not this article does present a simple and valid fact, BNPL is abused in US, just like subprime mortgages.

BTW,the same question can also be asked that you seems to be quite mad about many people seeing this article.

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