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Avoid the risks of having multiple buy now, pay later loans

FILE - In this June 15, 2018, file photo, cash is fanned out from a wallet in North Andover, Mass. Buy now, pay later" loans typically offer a simple, zero-interest payment structure that can make keeping up with installments easy and affordable for some borrowers. But unlike other types of financing, such as credit cards, these plans aren't currently reported to the major credit bureaus. (AP Photo/Elise Amendola, File) FILE - In this June 15, 2018, file photo, cash is fanned out from a wallet in North Andover, Mass. Buy now, pay later" loans typically offer a simple, zero-interest payment structure that can make keeping up with installments easy and affordable for some borrowers. But unlike other types of financing, such as credit cards, these plans aren't currently reported to the major credit bureaus. (AP Photo/Elise Amendola, File)

By JACKIE VELING / NerdWallet via The Associated Press February 19, 2022 5 min read

“Buy now, pay later” promises simple payment plans that can make financing your next purchase easy and affordable.

These plans typically divide your total purchase into four equal installments with zero interest. The first installment is due at checkout, and the remaining three are due every two weeks until the loan is paid in full.

But even a simple payment plan can turn complicated when you’re juggling three or four of them at a time – a problem unique to buy now, pay later, which unlike other forms of financing, doesn’t look at similar existing debts when extending an offer.

KNOW THE RISKS OF MULTIPLE BUY NOW, PAY LATER LOANS

While certain debts like credit cards and traditional loans are reported to the three major credit bureaus, buy now, pay later loans typically aren’t, so lenders don’t know how many loans you have outstanding and can’t assess your ability to afford more.