More than a third of Americans are considering buy now, pay later as the holidays kick off this year.

BNPL Tracker: 35% of Consumers Consider Applying for a Buy Now, Pay Later Credit This Month

According to the November 2024 LendingTree BNPL Tracker, more than 1 in 3 consumers (35%) say they are at least considering using a buy now, pay later (BNPL) loan this month, the highest percentage from September 2023.

Each month, the LendingTree BNPL Tracker asks Americans whether they plan to apply for a BNPL loan that month and how confident they are of repaying it without missing a payment. We also ask how often consumers plan to apply for a BNPL loan in the next six months.

How many Americans plan to use buy now, pay later loans this month?

LendingTree’s November 2024 BNPL Tracker study shows that 35% of Americans are considering applying for a BNPL installment loan this month. This is up two percentage points from October and is the highest percentage since September 2023 (35%).

This month, 21% said they planned to apply—the highest percentage since 21% in July 2023—and 14% said they might apply.

The start of the holiday shopping season is likely at least partly responsible for the month’s sales surge. Since we started tracking in December 2021, November has tied June for the highest average percentage of those considering applying for a BNPL loan, at 17.7%. However, perhaps surprisingly, November had the second-highest average percentage of those who said they could apply, at just 15.3%. (January leads with 20.0%). Add up these two numbers, and we see that on average, one in three Americans consider taking out a BNPL loan each November, which is lower than several other months.

Additionally, 45% of Americans say they plan to apply for a BNPL loan at least once in the next six months, up two percentage points from October and representing the highest percentage since a record 51% in June 2023 . That 45% includes 16% who say they plan to do so at least three times during this period, the highest since 17% in July 2023.

Buy now, pay later Credit

Generally speaking, using BNPL will not help you get credit in the same way that using a credit card, personal loan, or other type of credit can. BNPL loans are not typically included in credit scoring formulas. It’s very likely that this will change in the next few years as lenders, credit bureaus and credit scoring companies figure out how best to incorporate these loans into the formulas. However, at this time, a perfect payment history on your BNPL loan does not improve your credit score.

Once the situation changes, we may see a surge in the use of BNPL loans. A LendingTree survey conducted in March 2024 and published in April 2024 found that 56% of BNPL users said they would be more likely to use BNPL loans if they helped them get a loan. Only 16% said they would use them less often, and 28% said it would not influence their decision.

More than 6 in 10 parents with young children (64%) who have used BNPL said they would be more likely to do so if it helped them improve their credit, while 61% of Gen Z men (aged 18+) under 27) and millennials (ages 28 to 43) BNPL users said so.

How many Americans are behind on their BNPL loan payments?

A 2024 LendingTree survey found that 47% of BNPL users were behind on one of their loans, including 34% who were behind on one of their loans in the past year.

This is a large percentage. However, it makes sense based on consumer confidence levels in our monthly BNPL tracker.

According to the November BNPL Tracker survey, 50% of respondents who are at least considering taking out a BNPL loan this month say they are very confident they will be able to repay that loan without missing a payment. This is two percentage points less than in October. Meanwhile, 36% say they are only somewhat confident, up six points from October and matching the 2024 high.

While this adds up to 86% of people who feel at least somewhat confident about repaying their BNPL loans on time, it still means that a significant number of people are taking out these loans with doubts as to whether they will be able to repay them without incident. This is far from ideal.

Only 4% say they are somewhat or very unsure, while 11% say they are neither confident nor unsure.

How much do people spend by buying loans now, paying later?

According to an April 2023 Experian report, the average purchase price for a BNPL loan is $132.

However, there is no doubt that BNPL is used for a huge number of products across a wide range of prices. For example, a 2024 LendingTree study found that consumers used loans for everything from groceries and restaurants to travel, appliances and home decor.

Half of BNPL users (50%) said BNPL is their preferred payment method for long-term purchases—that is, those for which they cannot afford to pay in cash—while 34% said they prefer credit cards for these shopping.

What services are the most popular?

PayPal, Affirm, Afterpay and Klarna are the most popular BNPL apps.

BNPL is a crowded field with many players involved, including Apple, whose Apple Pay Later was the fifth most popular service in our survey despite only launching in March 2023. survey.

More than half of all BNPL users said they used PayPal (53%), 37% used Affirm, 33% used Afterpay and 30% used Klarna. Among other firms we asked about, only Apple Pay Later (13%) was used by more than 10% of respondents.

All four companies offer BNPL apps, but their services can also be used through web browsers – often through retailers’ online checkout pages.

What do you need to know before taking out a buy now, pay later loan?

If you’re one of the millions of Americans who have tried BNPL loans, or if you’re among the millions who are more likely to consider them in the near future, here are a few key things to keep in mind:

• You may be asked to pay every two weeks.. Most loans require consumers to make monthly payments. However, with many BNPL loans – especially “quadruple pay” loans – you’ll have to make payments every two weeks. BNPL lenders typically require you to connect a debit or credit card to your account the first time you use it so that payments can be received automatically when due. You will need to ensure that you have sufficient funds or available credit within the due date for the automatic payment to be successful.

• Many (but not all) BNPL loans are interest-free. BNPL loans pay in four are often interest-free as long as you pay them on time. However, longer-term buy now, pay later loans can have interest rates of up to 30%, rivaling the highest rates on credit cards. Before you apply, make sure you understand the rates because what you don’t know could cost you.

• Your credit may or may not be affected.. Your experience may vary greatly depending on the lender when it comes to loan processing. This is true both from a loan approval perspective and from a payment history reporting perspective. Some require a soft credit check, while others do nothing. Some will charge late fees and report missed payments to the credit bureaus, while others will not, and sometimes this information can be difficult to find. BNPL loans aren’t subject to the same disclosure requirements as credit cards, but it’s worth taking the time to find this information.

• You have other options. Buy now, pay later. Loans can be a great tool. They’re often interest-free, with predictable payment schedules and no extras that can drag people into debt, but they’re not always the best option. Credit cards provide long-term affordable credit, typically better rewards, and important consumer protections that BNPL doesn’t have. Zero interest balance transfer cards and low-interest personal loans allow you to consolidate and refinance debt. Even store credit cards, if used wisely, can provide targeted rewards and discounts that can turn out to be a good deal for the right customer.

• Take your time with it. People make bad decisions when they’re in a hurry and don’t know what they’re getting into, and money is no exception. Before you apply for a BNPL loan, click the “Learn More” or “Learn More” button on the merchant’s checkout page. Before you apply, make sure you understand the basics—interest rates, payment schedules, credit checks, fees. You’ll be glad you did.

This article originally appeared on lendingtree.com and was syndicated MediaFeed.org

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