Latest news with #buynowpaylater
Yahoo
7 days ago
- Business
- Yahoo
Affirm Likely to Continue to Gain Share in Buy Now, Pay Later Space, Oppenheimer Says
Affirm (AFRM) is poised to continue expanding its share in the fast-growing buy-now, pay-later marke Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Wall Street Journal
22-07-2025
- Business
- Wall Street Journal
Your Bank Might Punish You for Those ‘Buy Now, Pay Later' Purchases
Banks don't want you bingeing on 'buy now, pay later' plans, and they say it might actually hurt your chances of getting approved for a mortgage or credit card. Some of the popular point-of-sale loans from companies such as Affirm and Klarna will be factored into credit scores later this year when FICO rolls out its new scoring model. Using a loan to pay for a couch or a pair of pants in installments might improve your score if you keep up with payments, according to Fair Isaac Corp., the company behind the most widely used U.S. credit score.
The Independent
18-07-2025
- Business
- The Independent
Young people! Here's what you need to know about ‘buy now, pay later' loans
Klarna and its pals have taken over the British High Street, with buy now pay later (BNPL) loans exploding in popularity. The market ballooned from £60m in 2017 to more than £13bn last year. One in five Britons used it to borrow money over the 12 months to May 2024. Regulatory oversight is long overdue and with legislation finally on the books, the Financial Conduct Authority has delivered its proposals. They are really quite mild. It is worth remembering that the government decided not to fully apply the Consumer Credit Act to these products even though, I repeat, they are loans. This has tied its hands to some extent. Under the plans, BNPL lenders will have to secure authorisation, check that people can afford to repay their loans, spell out the risks and charges for late payment, and offer more support to those who get into trouble. That could include forbearance (the sector will just love that one). Consumers will also be able to approach the Financial Ombudsman in the event of disputes. These loans are disproportionately popular among younger people (30 per cent of adults aged 25-34 used them at least once in the year to May '24), poorer people (nearly one in three adults with 'low resilience' took them out) and those living in the most deprived parts of Britain (29 per cent). I'm not about to deny that they can prove useful. Deferring the cost of purchasing a new school uniform for the kids for 30 days, or paying in three monthly installments, could be helpful to a low-income parent. But that's not how these things are typically used, and they are so easy to access it is very easy to get into trouble with them if they aren't used carefully. In my view, this is the crack cocaine of lending. The business model speaks to that. BNPL firms receive a commission on each transaction from the retailers they work with. Why are the latter willing to pony up? Because BNPL loans encourage consumers to spend more. Commissions aren't the only revenue stream available to firms in the sector, however. They also typically charge late fees and the FCA found what it called 'high arrears levels' in the sector with some firms generating 'significant revenue' from these charges. It further found that consumers weren't always aware that they could get hit for failing to pay on time. Critics of regulation argue that people shouldn't need handholding or nannying. The watchdog found that the most common use of BNPL in the 12 months to May 2024 was for lifestyle and beauty purchases (41 per cent), followed by 'treating myself or other people' (37% per cent). Surely it would be churlish to deny people the chance of a good time? I get the point. I do. But consumers should know what they're getting into and the sector hasn't always been good at explaining the risks. Indeed, the regulator criticised what it termed 'benefit framing' where firms emphasise the good bits and downplay the dangers. For the record, Klarna described the proposals as 'a win for the consumer' while rival Clearpay said it would 'support the FCA as it consults on and finalises its specific rules for the sector'. Make of that what you will. I still fear that BNPL's explosive growth, and some of the practices found by the regulator, means the potential is there for a serious scandal. Meanwhile we're likely to see snowballing numbers of cautionary tales, in which people find themselves plunging into financial hell. That being the case, it is regrettable that the wheels of regulation are still moving at the speed of a sloth with a stitch: After five years of consultation with the Treasury, oversight of the sector still won't finally come in until next July.
News.com.au
22-06-2025
- Business
- News.com.au
How Afterpay and Zip are killing home loans
Thousands of Aussies are being quietly shut-out of the housing market not for bad credit, but because of Afterpay, brunch, and one too many online shopping sprees. Finance, real estate experts, and buyers' advocates have sounded the alarm on a hidden world of 'silent black-listing', where hopeful homebuyers are knocked back by banks with no explanation, despite strong incomes and even formal pre-approvals. And you might already be on the list. Ray White AKG principal Avi Khan said he's seen an alarming rise in finance knock-backs over issues buyers never saw coming. 'It's particularly affecting people using buy-now-pay-later services like Afterpay and Zip,' Mr Khan said. 'Any mispayment — even one missed $40 repayment — is enough to raise red flags with the banks. 'Most borrowers have no idea they're being monitored at that level.' While many buyers assume their credit score is all that matters, Mr Khan said banks are digging deeper, and judging harshly. 'People think if they pass the online mortgage calculator, they're good to go,' he said. 'But banks apply a strict stress test those calculators don't factor in. 'So they enter the market with false confidence, and when finance is declined, they're devastated.' Melbourne buyers' advocate and expert in buyer psychology Cate Bakos said she's heard of buyers penalised over spending that feels minor, but looks messy on paper. 'Those services can have a significant impact,' Ms Bakos said. 'And it's not just buy-now-pay-later platforms. If a lender sees cash being pulled out at a casino, that's not a good look. 'Even your subscriptions and payment services show up in your statements — and that can absolutely affect how the banks view you.' Ms Bakos said lenders are trained to spot risk, even if the borrower doesn't see it. 'You've got to think like an assessor. What do your statements say about you? That's what the bank is judging,' she said. Cohen Handler Victoria managing director Nicole Jacobs said even buyers with solid savings can be left reeling when banks reassess borrowing limits without warning. 'It can be absolutely devastating,' Ms Jacobs said. 'If you've been looking at properties in a certain price bracket, and then you're suddenly told your spending habits or credit conduct have precluded you from buying in that range, it feels like the rug has been pulled out from under you.' Ms Jacobs warned that lifestyle spending — even brunches or Afterpay splurges — can quietly erode borrowing power. 'Understand that borrowing isn't about how much you've saved — it's about what you can repay,' she said. 'Even with a great job, the background spending can hurt you. 'Being in a position to buy a home is far more valuable than another handbag or a few nice extras.' Finch Financial chief executive and mortgage expert Julian Finch said while there's no official blacklist, it doesn't mean you're not being flagged. 'If you've defaulted, had a loan declined, or behaved in a way that raises red flags, that information doesn't disappear,' Mr Finch said. 'It sits in the bank's internal systems and can stop you getting a loan — not just with them, but potentially with other lenders too.' Mr Finch said defaults, dishonoured payments, overdrawn accounts and too many applications in a short time can all quietly trigger a silent no, especially when banks are assessing repayment risk. 'Banks monitor conduct,' he said. 'Even if your credit score is intact, poor account behaviour can sabotage your application from inside the bank's risk systems.' The Finch Financial Finder said certain occupations — especially those with casual or unstable income — can also prompt concern, regardless of salary. Mr Finch urged buyers to get a proper credit-assessed pre-approval before shopping — and to avoid applying to multiple lenders in desperation. 'Work with a finance expert who understands how banks think,' he said. 'We can match you with lenders who are suited to your situation and help avoid unnecessary hits to your credit file.' 'I can't say too much just yet, but there's certainly more activity to come.'
Wall Street Journal
18-06-2025
- Business
- Wall Street Journal
Prudential Unit Lends $500 Million in Private Credit to Affirm
An investment arm of insurer Prudential Financial PRU -1.48%decrease; red down pointing triangle will buy up to $500 million of consumer loans from technology-backed consumer lender Affirm AFRM -1.56%decrease; red down pointing triangle Holdings for a period of three years. Most of the loans come due in six months and Affirm will be able to re-lend the investment throughout the life of the deal, allowing it to finance $3 billion of buy-now-pay-later loans.
