EyeOnThe short answer
Not automatically. A genuinely interest-free, fee-free plan may cost the same as paying now, rather than less. Interest, late charges and the purchase price can change the overall cost.
What it means
A common format splits a purchase into four payments: one at checkout and the others every few weeks. A 120 purchase would be four payments of 30. Many plans do not charge interest if payments are made on time, though other versions do.
BNPL is a form of credit, even when it does not look like a loan, and is regulated in some places and lightly regulated in others.
How it works
Providers may do a soft or hard credit check and may report accounts to credit agencies. Late payments can lead to fees or restrictions, and in some places reporting practices are still changing.
Several plans running at the same time can be hard to keep track of, because each has its own dates.
A simple example
Three purchases each split into four payments produce twelve payment dates across a few weeks, possibly with different providers and different payment methods. That is why a list or calendar of due dates can help, and why many people check their budget before adding another plan.
Things worth checking
- Check for late fees and what happens if a payment fails.
- Returns and refunds can interact with the payment schedule.
- Ask whether the provider reports to credit agencies.
- Add instalments to your monthly budget so they are not forgotten.
How it varies by country
Regulation of BNPL ranges from full consumer-credit rules to very limited oversight, and is changing in many countries.