Buy now, pay later (BNPL) loans aren’t only for fancy shoes, kitchen appliances and gaming systems, according to an update from LendingTree.
Millions of Americans “use these loans as lifelines.”
The latest LendingTree survey finds “that 27% of BNPL users say they use these loans as a bridge to their next paycheck, which can help them make ends meet amid rampant inflation, rising interest rates and headline-making layoffs.”
The loans are also “being used to purchase basic necessities. Case in point: 21% of BNPL users say they’ve used one of the loans to buy groceries.”
But things don’t always work out. More than half of users — “including almost two-thirds of Gen Zers — say they’ve regretted a BNPL-financed purchase, and 40% of these users have paid late on one of the loans.”
Despite those warning signs, BNPL use is “still on the rise, with 46% of Americans saying they’ve used one of the loans — up from 43% a year ago.”
That growth has “led other companies to jump in the fray alongside BNPL firms like Klarna and Afterpay — including Apple, which introduced Apple Pay Later in late March. However, the meteoric growth in BNPL popularity and usage of these loans in recent years appears to be slowing.”
Key findings, shared by LendingTree, are as follows:
- Nearly half of Americans say they’ve used a BNPL loan, but growth is slowing
- BNPL loans being used for groceries, other basic expenses
- Late payments, regrets common among BNPL users
- Credit cards heavily preferred above BNPL for stretch purchases
As noted in the update shared with CI, the growth between 2022 and 2023 “was significantly lower than between 2021 and 2022.”
It’s unclear “whether that means BNPL growth is beginning to plateau or if rising inflation has had a cooling effect on demand (or if other things are at play), but it bears watching going forward.”
As mentioned in a blog post, “the younger you are and the higher your income, the more likely you are to use these loans, generally speaking.”
One exception: Those making $100,000 or more a year “are the second-least likely to have used the loans, ahead of only those making less than $35,000 a year.”
For more details, check here.