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Buy Now Pay Later is short-term financing that allows customers to make purchases now and pay for them at a decided future date. It is often interest-free. It is also referred to as a point-of-sale instalment loan, and is becoming a popular payment option in India, especially when shopping online.
Key Takeaways
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Buy Now, Pay Later (BNPL) enables customers to purchase immediately and pay later through flexible, often interest-free instalments within fixed schedules.
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BNPL differs from credit cards as it features fixed repayments, transparent schedules, and generally avoids long-term interest accumulation.
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Angel One’s BNPL helps investors manage liquidity efficiently, offering flexible payments, clear repayment timelines, and minimal fees.
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Timely BNPL payments can enhance credit history, while missed payments may negatively impact credit scores.
What Is Buy Now, Pay Later?
BNPL is a financing agreement that allows consumers to buy things without paying for them all at once. To avail of this, you sign up with a company that provides this facility, which makes the payment on your behalf.
Once the lender pays the provider on your behalf, you must repay the amount to them within a stipulated period. You can also pay it via no-cost Equated Monthly Instalments (EMIs). If you cannot repay the total amount within the stipulated period, the lender will charge interest on the amount.
BNPL is different from making a purchase with a credit card. When a credit card is swiped to pay for things, you need to pay the entire amount on the due date. If you pay only the minimum payment that is due each month, the issuer will charge interest on the remaining until the amount is paid. This interest is calculated on a daily basis, so it can add up to a significant amount.
Whereas, in BNPL, often interest or fees are not charged. They have a fixed repayment schedule, typically weekly or monthly. You are already told what you will need to pay each time, usually the same amount. When compared, it is somewhat similar to any other sort of unsecured consumer or personal loan.
How Does Buy Now, Pay Later Work?
Every company has its terms and conditions regarding the buy now, pay later programs. Generally, the point of sale instalment loans operate on the following lines:
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You can purchase at a participating retailer and can opt for Buy now, pay later at checkout.
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If approved, which can be told in seconds, you make a down payment, which a portion of the total amount, generally 25%.
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The remaining amount is then paid off in a series of instalments, which may be interest-free.
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This instalment amount can be paid via bank transfer, checks, debit, or credit cards automatically.
Most BNPL companies now only require a soft credit check for approval, which usually doesn't affect your credit score. However, some providers, especially for higher-value purchases or longer-term plans, may conduct a hard credit check, which can temporarily lower your score.
BNPL services are generally offered at specific partner retailers (online or in-store), so you can only use them where the service is an available payment option. Also, providers often have transaction limits (e.g., a maximum of ₹1 lakh in some cases in India, or lower limits for short-term plans). Certain categories of goods or services might also be excluded based on the provider's terms. These limits are to prevent any misuse or fraud.
Special Considerations for Buy Now, Pay Later
You must be aware of some of the things before entering into a BNPL arrangement:
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Payment Terms Variability
Foremost, it is essential to understand the repayment terms that you agree to. These terms can be different for every buy now, pay later company. Different companies have different payment terms. Some companies may also require you to pay the balance amount with biweekly payments over a month-long period.
Other companies may give you three months or even longer to pay off your purchases. It is essential to know how your payments will work to plan for them in your monthly budget. It ensures that you can afford your payments as well as make them on time.
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Late Payment Fees
If you miss a payment for a buy now, pay later agreement, then it can result in late fees. This late payment history, when reported to the credit bureaus, can hurt your credit score.
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Interest Rates
Buy now, pay later platforms can also charge interest on purchases that can easily outpace or match what you might be paying with your credit card. Also, keep in mind that though you may be approved for a 0% interest point of sale, it is not always guaranteed.
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Return Policies
It is essential to consider return policies and how the BNPL might affect your ability to return something you have purchased. It is also possible that the merchants may allow you to return the items, but you wouldn’t be able to cancel the BNPL arrangement until you have provided them with the proof that the item has been accepted back.
How To Avail BNPL?
To avail Buy Now, Pay Later (BNPL) services in India, follow these steps:
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Select a reputable BNPL service provider available.
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Sign up and create an account on the chosen platform using valid credentials.
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Explore the list of partner merchants on the BNPL platform.
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While making a purchase, choose BNPL as the payment option during checkout.
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Complete the necessary information, such as personal details and KYC requirements.
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Await approval, and upon confirmation, enjoy deferred payment options for your purchases. Monitor and manage repayment schedules according to the agreed terms.
Advantages and Disadvantages of Buy Now, Pay Later
Advantages:
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A disciplined and convenient way to pay for purchases over time.
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Usually, zero or lower interest rates than the credit card
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Approval time is fast
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A high credit score is not required to qualify.
Disadvantages:
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It is easier to overspend, and hence, payments can be hard to track at times.
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No cashbacks or rewards are earned on the purchases.
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Late or missed payments may damage the credit score.
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Payments may continue even if the item is returned.
Future of BNPL: What’s next?
The Buy Now, Pay Later (BNPL) market is evolving rapidly, and is no longer just an option at checkout but an integrated financial utility. Its growth will be driven by two primary forces - deep integration and regulatory maturation.
On the product front, BNPL is expected to expand significantly into higher-value sectors like travel, healthcare, and education, and integrate with broader financial products such as investment accounts or structured savings. This will necessitate a shift towards more sophisticated, AI-powered underwriting to manage credit risk in real-time and enable highly personalised offers. The experience will become increasingly embedded and seamless across both e-commerce and physical retail points of sale.
Crucially, regulatory scrutiny is tightening across global markets. This will usher in new requirements for greater transparency, robust affordability checks, and credit bureau reporting. While this may temper the frictionless user experience, it will ultimately create a more sustainable and secure ecosystem by protecting consumers and legitimising BNPL as a core part of the consumer finance landscape. The outcome is a smarter, bigger BNPL market focused on responsible, long-term customer engagement.
Conclusion
BNPL is more than a deferred payment; it gives you greater freedom to participate in financial markets however and whenever you choose. The advantages of flexible funds mobilisation, better liquidity, and protection make it an appealing instrument for proactive investors. The future of BNPL is projected to have more applications, smooth online experiences, allowing to optimise