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How ‘buy now pay later’ differs from personal loan?

Ecommerce websites are finding newer avenues to lure customers into buying stuff. While discounts, deals, and cashback have become more important than ever, ‘Buy Now Pay Later’ has been introduced by several online sellers to make life easier for buyers. With BNPL, you can purchase the product of choice even if you are short on funds and pay the entire sum at a later point in time.

Although this sounds like an exciting proposition on the part of the online sellers, the concept here resembles a credit card more, instead of a personal loan. BNPL, without a doubt, is slowly emerging as one of the most sought-after online payment schemes and it might not be surprising to see it capture 9 percent of the payment-specific market scheme by the end of 2024.

However, you can even get a personal loan to buy a product of choice, which is an entirely different approach as compared to the BNPL.

How do Personal Loan and BNPL differ?

  • Loan Value

As mentioned, BNPL doesn’t offer cash in hand and is only meant to ease your eCommerce purchase. Therefore, if you want products valued at less than Rs . 1 lakhs, BNPL can be a reliable option to consider. However, a personal loan puts cash in your hands and is the best way forward if you need a bigger sum to manage concurrent expenses.

  • Repayment

Here comes the tricky part that drastically separates these two credit availing schemes. BNPL requires the borrower to pay out the sum within 15 to 30 days, in full. However, if the amount is a sizable one, you can even opt for a 3-month EMI scheme. Personal loans are way more flexible in this regard as you can borrow the sum and select the repayment tenure at 12 to even 84 months, depending on the EMI value you wish to pay.

  • Interest Rates

Personal rate interest rates are fixed. This means, your EMIs will be calculated as per the interest rate agreed upon with the lender in the first place. However, interest calculation can be a tad complex when BNPL payments are concerned. If you plan on paying the sum within the stipulated time frame, the lender doesn’t charge any interest.

However, for delayed payments, the interest rates are more like the revolving credit card liabilities.

  • Goals

As far as the requirements are concerned, BNPL is mainly used to purchase premium goods by paying nothing upfront. Personal loans, however, are more conducive to handling emergencies like house renovation, marriage, higher education, and more.

In addition to these differences, procuring a personal loan and a BNPL facility are also dissimilar when it comes to documentation. Unlike a personal loan that requires several authenticating documents, BNPL depends on your eligibility, eKYC, and credit score.

Bottom-Line

While a BNPL is quite effective and rewarding, it is advisable to get a personal loan for managing scenarios more complex than shopping online. However, if you are confused regarding lenders, pick one at the Finserv MARKETS and get the best deals on any lending scheme.