BNPL: Limit instalments to 10-15% of income and restrict usage to two plans

Those with multiple loans, irregular earnings, or poor repayment habits should avoid this form of quick credit

This festive season, India witnessed a sharp uptick in demand for quick credit, with digital lenders reporting up to a 50 per cent rise in festive loan applications. Interestingly, even higher-quality borrowers are tapping into short-term credit options for convenience and flexibility. Even as demand gathers pace, borrowers need to ask if Buy Now Pay Later (BNPL) is right for them.

 

How BNPL works

 

BNPL is gaining popularity for purchases like mobiles, gadgets, and household items. It lets consumers buy instantly and pay in instalments over a few weeks or months.

 

“At checkout — online or offline — the customer