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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

#181

Post by toast0 »

sebzim4500 wrote: post #161
_fat_santa wrote: post #93

Earlier quoted context omitted.

I see BNPL companies as having two types of customers: those that can't afford the full price and want to pay over time, those that read the terms closely and realized the deal is too good not to take. I took out a number of BNPL loans last year and it was never because I couldn't pay the full price but rather if I was getting the money at 0%, "free money". But I was never the target customer of these places, I was j…

Did that actually work? I just assumed they would find a way to charge me 'interest' by having processing fees or some other scam, so I never used them.

I never used one, but I'd assume they're as good at following the plan as you are (I had read some articles that said some of these lenders operate on voluntary repayment, no fees, no collections, but I don't know how widespread that was), but interest rate arbitrage has to be considered against the effort.

It's much less effort to use my everything credit card and get my 2% discount than to do a 0% apr over four months (or whatever), setup a new account, setup payment at that new account, remember to make the payments, etc and for what? Short term bank interest on most of my purchases would be peanuts, especially since I wasn't getting 2% bank interest when BNPL was at 0%.

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

#182

Post by foldr »

ivanche wrote: post #59
Ultimatt wrote: post #52

Earlier quoted context omitted.

Because I assumed you'd understand the depreciation of the asset is a lot less than the appreciation on your investments or cash that you can do in the other scenarios. The entire point is its offset. Also that's not a business asset description, thats just normal life??? WTF buys a camera and doesn't offset some of the cost doing their mates wedding? You're not thinking rationally if you think using the credit syste…

Moral aside of shooting mates' wedding and charging for it(!), but as soon as you use equipment to earn it's a business/side gig. You may not like it but I'm sure tax authorities of any sane country will disagree with you. For the rest I actually agree with you and think credit system is predatory and that if one can, one should take advantage of it. Just that buying something on credit because want, and using that s…

Why is it a problem if it’s a business or side gig? In the UK at least that just means that you need to report the income on your tax return if it’s above a certain amount. It’s not difficult. I’m not sure I’d describe countries that make you do more than this as ‘sane’.

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

#184

Post by __alexs »

dylan604 wrote: post #120
__alexs wrote: post #69

Earlier quoted context omitted.

> First, c'mon, people don't (directly) finance sandwiches. Have you ever seen a sandwich shop accept Klarna? I put a (vegan) sausage roll from Gregg's on Monzo Flex the other day...

And when you miss a payment, what do they repo?

They can repo all of these stale sausage rolls but I don't think it'll be worth their time.

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

#185

Post by customname »

vel0city wrote: post #168
sebzim4500 wrote: post #161

Earlier quoted context omitted.

Did that actually work? I just assumed they would find a way to charge me 'interest' by having processing fees or some other scam, so I never used them.

I imagine there are a number of those out there, but I've taken many BNPL deals that were zero fee, zero interest. It truly worked out to be the exact same cost whether I paid upfront or took the BNPL. I imagine the BNPL people made their money from the same kind of CC fee models and from customers who ended up not being able to stay within the 0% timeline. From my memory it usually had some big fines or interest rat…

I always imagined that the companies using the service at checkout would give the BNPL company a percentage of the sale if the customer used the service. Even if the price is the same for the consumer, BNPL companies could argue that they generated sales that might've backed out had they not been available.

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

#186

Post by gamerDude »

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…

I see your point in saying that credit cards and BNPL are different. But I think its very inaccurate to say that credit cards do not change customer's purchase decisions. Pre-credit cards you had to pay in cash or a check. Cash has the excellent value of you can't spend more than you brought with you. It limits spending to a pre-thought out amount.

Ever go out on the town and realize you spent more than you expected. Or look at your balance at the end of the month and have to look through to figure out how you spent $1000 more than normal? (I know I have, maybe I'm the weird one, but I doubt it).

And I think in that way, BNPL does have similarities. It allows you to spend more than you planned because you don't have to think about your limitations in the moment.

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

#187

Post by whoisburbansky »

_huayra_ wrote: post #126
_fat_santa wrote: post #93

Earlier quoted context omitted.

I see BNPL companies as having two types of customers: those that can't afford the full price and want to pay over time, those that read the terms closely and realized the deal is too good not to take. I took out a number of BNPL loans last year and it was never because I couldn't pay the full price but rather if I was getting the money at 0%, "free money". But I was never the target customer of these places, I was j…

Maybe I just haven't had the opportunity to buy any big ticket items with BNPL, but the few times I tried it (trying to do the "free money" thing, getting a bit more interest in my HYSA by amortizing the total payment out over time), it just created kind of a financial tracking nightmare. I'd get flurries of emails about how my "pay in 4" payment was about to process....for $13. Trying to keep track of all that for a…

How does the floor rate make it a less terrible credit card?

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

#188

Post by nibbleshifter »

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…

Food delivery apps in Europe (Deliveroo, Lieferando, etc) take Klarna, which is BNPL. And people use it.

Its absurdly common.

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

#189

Post by nibbleshifter »

desas wrote: post #19
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…

> 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. In the UK, Deliveroo (a food delivery company) will let you pay by Klarna for orders >= £30, including from sandwich shops. Here's the press release: https://www.klarna.com/international/pr…

Pretty much all the food delivery apps take Klarna now it seems.

Never tried it, I won't touch Klarna with someone else's bargepole, but it is a thing and its fucking silly.

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

#190

Post by mschuster91 »

buescher wrote: post #135
mschuster91 wrote: post #24

Earlier quoted context omitted.

> "But old cars break down and are expensive to get repaired" Yes, but you don't have money to pay someone else to repair it, old cars have cheap parts and are relatively simpler to repair, learn how to do it, you're not in a position to be fussy about what skills are beneath you if you can't pay someone else to do it, stop thinking so highly of yourself and get to it! You're ignoring the "boots theory" [1]. A new or…

The boots theory does not really hold for mass produced items, including boots. A usable pair of cheaply made boots costs less than resoling a good pair of boots. I propose the Buzz Bissinger boots theory: Buzz is not rich because he buys fancy boots, Buzz buys fancy boots because he inherited a lot of money. https://www.gq.com/story/buzz-bissinger-shopaholic-gucci-add... The sweet spot in TCO for cars is generally (…

> A usable pair of cheaply made boots costs less than resoling a good pair of boots.

Yes, it does, but it's worse for everyone:

- those who make the shoes because the conditions under which clothing in general is made are horrible (see e.g. the numerous instances of fires in Bangladeshi factories)

- the environment because these cheap boots are made out of fossil resources, they have to be shipped around, and at the end of their life time they can't be recycled so they either end up in landfills or, worse, trash incinerators

- for the end user since shopping boots consumes time and effort

For cars, hell for virtually all mass produced items, the same principle applies. And it's only "cheaper" because a lot of the problematic factors involved are costs that are externalized.

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