BNPL (Buy Now, Pay Later) is one more reason to have a financial advisor. Buying and paying later is an idea based on creditworthiness, immediate demand, and the need to make a profit. What BNPL means(at least, in Nigeria) is that after paying the actual cost of the product, you still have to pay an extra installment as a service charge.
So if the phone is N60,000, for example, and you pay N20,000 in three installments, you have to pay an extra N20,000 as payment for service. This raises the final price of the phone to N80,000 because you are paying in installments. It is minus the profit accrued by the seller on the N60,000 original price. One of the features of this service is that you have to pay on time or risk affecting your credit scores.
The effect on your credit score may affect you in the future when you need larger loans for other projects. Paying in installments is a form of short term financing plan. It provides financial convenience on the one hand but takes advantage of your tight finances on the other hand. This comes by giving you the option to select your payment frequency.
In the short term, it is great for your spending capacity. In the long run, you end up being cheated into investing more than required for a product. This is pronounced when you meet someone who buys the same good for a lower total price.
Buy now, Pay later gives you options to select between the devil and the deep blue sea (a dilemma you can wade through with the help of a licensed Wealth advisor/financial advisor).
Can you pay in full and get the product? Or do you prefer to extend your ability to spend on other things while paying more than normal for the product?
The best advice would be to seek a financial advisor. Phones of N80,000 may be easy to manage. But entering a deal like this for a car or a house may be bad for you if a proper assessment is not taken.
This is in regards to long-term implications as well as short-term options available to you.
If you are in the business of growing your wealth, then buying now and paying later might not be healthy for your finances.
In an environment where financial fluctuations are off the charts, recording bad losses is more likely than not. It is a consumption-based financing strategy that doesn’t put investment in focus.
The whole concept of Buy Now, Pay Later brings me to the idea of having a financial advisor. The need for one has never been more pronounced than now with the prevailing financial crunch in Nigeria. Visit us at zimvest.com.ng for sound advice based on current realities.
