August 8, 2022

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Buy now, pay later loans can get complicated when you want a refund

2 min read

Some shoppers say “buy now, pay later” may not be all it’s cracked up to be.

After experiencing explosive growth during the pandemic — spending on BNPL in the U.S. soared 230% since the start of 2020 — the hype around installment buying is fading as costs for everyday items rise and consumers dial back on discretionary purchases.

Although 45 million shoppers embraced installment purchases last year alone, some have a case of buyer’s remorse, especially if they’ve shelled out more than they can afford or are struggling to keep track of multiple loans.

Nearly 70% of buy now, pay later users admit to spending more than they would if they had to pay for everything upfront, according to a survey from LendingTree. As a result, 23% of consumers said they’ve regretted financing a purchase this way, LendingTree found.

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About 10% of users reported difficulties over the past year making payments on the BNPL loans they took out, according to a separate report by the Federal Reserve Bank of Philadelphia’s Consumer Finance Institute

But making a return can be another issue altogether.

“People have gotten accustomed to refunds and returns being fairly simple when something is bought with a credit card, but with buy now, pay later loans, since they’re so new, the process isn’t quite down to a science,” said Matt Schulz, chief credit analyst for LendingTree.

Buying is the easy part; returning, not so much

“Part of their growth has been the ease and clarity of these loans but that certainly doesn’t seem to be the case when it comes to refunds, and that’s a problem,” said Schulz.

BNPL return policies vary and, in most cases, you’ll need to contact the merchant, as well as the loan provider, to get your money back. Retailers may also have their own rules for BNPL returns and whether goods bought online can be…

2022-06-29 09:17:07

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