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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

#221

Post by flextheruler »

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.

I’ve always heard new cars are far more expensive in Europe at least Germany. You have sources?

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

#222

Post by RGamma »

grishka wrote: post #204

What absolutely blew my mind about this article is how it considers being in debt a norm. An unspeakable rule of sorts to not even try to manage your finances and save up and all that. Like wtf? How the hell do you function in society if you can't afford groceries and have to buy them on credit? The even more perplexing thing, to me, is why it's so common among Americans to pay for things with credit cards when they…

Americans have given up functioning. They're just doing now.

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

#223

Post by asoneth »

grishka wrote: post #205
speeder wrote: post #197

Earlier quoted context omitted.

Sometimew people really don't have a choice. I personally hate debt and when possible I pay everything with cash up front. My wife got pregnant, and our spending, specially on health was already sky high, so I did 5 months of overtime chasing a promised raise and possible promotion. Then I got fired. My last day of work was mid December. Child will be born soon. (Maybe even today, we are hoping for natural birth). Th…

So you can barely afford your own needs and have no savings, but you decide to have a child?.. No offense, I'm just curious about your thinking and priorities.

The person you are replying to had a job (likely in tech), a house, a car, and a chance at promotion when the child was conceived. That seems like a better position than most.

If your implied threshold for conceiving a child is that you must have acquired all of these things plus enough savings to weather unexpected medical events and extended job loss then that seems like a threshold that the majority of couples will not reach during their childbearing years.

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

#224

Post by mschuster91 »

buescher wrote: post #212
mschuster91 wrote: post #190

Earlier quoted context omitted.

> 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…

Oh ok, I was wrong. Working people should spend more of their paychecks on boots to prevent fires in Bangladeshi factories, and then it will be more comfortable walking to work because they can't afford a car. And no shopping in your utopia either.

Working class people should have larger paychecks so that they can afford proper clothing.

Look up charts for wage development and minimum wage on one side, and charts for CEO pay and gini coefficients (wealth distribution) on the other, over the last 50 years. There you have the answer why a working class person can only afford crap shoes and beater cars.

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

#225

Post by asoneth »

pessimizer wrote: post #138
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…

> If you don't have money for fast-food, then go to the grocery store and buy the ingredients yourself If you're talking about the US, if you're poor the nearest grocery store will be miles away, dirty, and the prices will be a 50% markup over what people pay in nice neighborhoods. Also, McDonald's will sell you an entire meal for $3 and is down the street.

I was going to say the same. I suspect that anyone who believes that fast-food is more expensive than a grocery store has never lived in a poor neighborhood.

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

#226

Post by gumby »

The author is confused about credit terms that have existed for decades. "Layaway" is when the retailer puts the product aside (won't sell it to another customer), holding it in the warehouse while the customer makes payments until the product has been paid for and is then delivered.

It makes (some sort of) sense for a capital purchase like furniture: furnture sells slowly; the retailer has to buy stock so there is a selection for the customer to choose from, ad is an expensive purchase for the customer.

It makes no sense for a sandwich (as the article says, `Putting a banh mi on layaway—this is the world that “buy now, pay later” programs have wrought.'). This is simply buying on ordinary credit.

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

#227

Post by olliej »

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").

Correct, you can always save indefinitely to get the required amount of money and pay for whatever all at once.

The problem is that the above is assuming that there is no value to having the thing you want to buy.

For example: a person might be able to save for 12 months to buy a new camera, but that's now 12 months they don't have that camera. Presumably you had reasons for wanting that camera.

While there are a bunch of things I don't think it's ever good to go into debt for, your claim that there's no justification other than "I deserve to treat myself like a king" is BS.

As per usual for articles like this they pose this in context of the extremes "sandwich in payments", which I suspect if people have done that it is accidental and/or "huh? what is this like".

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

#228

Post by buescher »

mschuster91 wrote: post #224
buescher wrote: post #212

Earlier quoted context omitted.

Oh ok, I was wrong. Working people should spend more of their paychecks on boots to prevent fires in Bangladeshi factories, and then it will be more comfortable walking to work because they can't afford a car. And no shopping in your utopia either.

Working class people should have larger paychecks so that they can afford proper clothing. Look up charts for wage development and minimum wage on one side, and charts for CEO pay and gini coefficients (wealth distribution) on the other, over the last 50 years. There you have the answer why a working class person can only afford crap shoes and beater cars.

But then they'll go shopping and burn more fossil fuels and buy more things that set Bangladeshi factories on fire! And throw their old things in trash incinerators! Shouldn't they just have to eat their old boots when they can't be resoled any more? By the way, where do you think new soles come from?

The boot theory is nonsense that at best only applies at a pretty narrow range of consumer goods - stuff that is barely fit for purpose vs stuff that is.

Cars are a great example because you pretty much can't save money spending more up front on one new car than on another new car, and there isn't even that big a difference in TCO between a new car and a comparable five-year-old car.

Working class people in the USA buy beater trucks to save over buying a new truck, which is a different trade, mostly because trucks are a working class Veblen good. They don't want to be seen in a Corolla.

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

#229

Post by MagicMoonlight »

Oh definitely but it's also going to kill credit cards dead.

Why would I use a 30% interest rate credit card with 1 month interest free when I can get 3 months interest free or spread it out for like 5%? I just wouldn't, credit cards are absolute trash in comparison.

I never take the interest option but I find the 3 month options really useful for spreading payments.

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

#230

Post by el-salvador »

phphphphp wrote: post #178
KineticLensman wrote: post #145

Earlier quoted context omitted.

> the way borrowers interact with it, which is what matters, is very different And the differences are?

A credit card is a long term commitment that integrates into your personal finance life, it’s a big decision you make once and can benefit from the broader finance system — e.g: you can refinance, you have legal rights (jurisdiction dependent). A credit card is a tool for the buyer. BNPL is a product that merchants pay for because it increases their conversion rate: customers who wouldn’t otherwise buy something, wil…

> BNPL is a product that merchants pay for because it increases their conversion rate: customers who wouldn’t otherwise buy something, will buy it, by clicking a button and entering into a financial agreement at checkout.

We've had BNPL for long time here in Central America and South America. In this side of the world, it's also the merchants that pay higher credit card processing fees for accepting BNPL payments.

What's curious is that BNPL in Central and South America is actually provided by the plain old banks or credit card issuers themselves. They are also 0% interest (Tasa 0/Cuotas/Visacuotas) and can be split in 3 up to 24 months depending on the purchase.

They are quite handy for larger than normal purchases, like an unexpected car repair or a tire change. But they can also be used for vacations, iPhones, laptops, furniture, appliance. In some countries you can even split a fast food meal in 0% installments.

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