What Is Buy Now, Pay Later?
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“Buy now, pay later,” or BNPL, is a type of installment loan. It divides your purchase into multiple equal payments, with the first payment due at checkout. The remaining payments are billed to your debit, credit card or bank account until your purchase is paid in full.
These plans don’t typically charge interest, though some may charge fees, depending on the provider.
You’ll often see BNPL payment plans available when you check out online. For in-store shopping, providers offer virtual cards you can download from the provider’s mobile app, save to your mobile wallet and use at the register.
» COMPARE: The top buy now, pay later apps for 2025
How does buy now, pay later work?
During checkout, you’ll see an option to break up your total purchase and pay a smaller amount now, instead of the full balance.
If interested, you’ll fill out a short application directly on the checkout screen. It may ask for information like your name, email address, date of birth, phone number and Social Security number. You'll also provide a payment method. Then, the BNPL provider will perform a soft credit check, which won't affect your credit score, and approve or deny your application in a matter of seconds.
The plan you’re offered will vary by provider, but many providers use a “pay-in-four” model, which divides your purchase into four equal installments, each due two weeks apart, with the first payment due immediately.
For example, if your total purchase is $300, you'll pay $75 at checkout, then have three remaining payments of $75, each due two weeks apart. As long as you make all payments on time, you'll pay off your purchase in six weeks.
While a pay-in-four plan doesn’t usually charge interest, longer-term BNPL plans may charge an annual percentage rate up to 36%. Fees, like for late or rescheduled payments, range from $2 to $15 and are sometimes capped at 25% of the purchase value, depending on the BNPL provider.
How to get approved for buy now, pay later
Approval criteria varies by BNPL provider, but even if you have bad credit, you can still get approved, since most providers consider multiple factors when reviewing your application. Here’s what they’ll be paying attention to:
Credit score and credit history.
The cost of your purchase.
The funds available on your chosen payment method, such as your debit card.
Any prior history with that provider, including how long you’ve had an account, past purchases, payment history, outstanding loans, etc.
One of the best ways to increase your chances of getting approved for a BNPL loan is to start with a small purchase that you can pay off on time or early. This builds a positive repayment history with the BNPL company and may help you get approved for a larger purchase in the future.
Does buy now, pay later affect your credit score?
Buy now, pay later doesn’t typically affect your credit score as long as you make the payments on time.
BNPL providers conduct soft credit checks to qualify you, which won’t hurt your credit score. They also don’t typically report payments to the credit bureaus for pay-in-four loans.
However, if you fall significantly behind on your BNPL loan payments, and you’re sent to a collections agency, that can be reported to the credit bureaus, which will hurt your credit score.
Should you use buy now, pay later?
There are several things to consider when deciding whether to use a BNPL payment plan.
Is your purchase necessary? NerdWallet recommends using BNPL only for necessary purchases you can’t do without, like furniture or a computer. Though the plan may seem simple and low-cost, you’re still taking on debt, and it’s rarely a good idea to go into debt for a nonessential item.
Does the plan charge interest? Look for a BNPL plan with no interest. This will lower your monthly payments and make it easier for you to pay back the loan.
Can you cover the payments plus other expenses? If you’re struggling to pay your bills or start an emergency fund, steer clear of buy now, pay later. Because of its convenience, it’s easy to overspend with BNPL, and you may end up owing more than you can repay.
When shouldn’t you use buy now, pay later?
Though BNPL may seem like a convenient payment option, it’s still a loan, and it has risks, including falling behind on payments and taking a hit to your credit score.
If you don’t need to make the purchase, or if you’re not sure you can keep up with the payments for the duration of the loan for any reason, you shouldn’t use BNPL.
Did you know?
The Consumer Financial Protection Bureau released a report in January 2025 that shows the majority of BNPL loans are held by borrowers with subprime or deep subprime credit scores (meaning borrowers with bad credit) . BNPL users also tend to hold larger amounts of other unsecured debts, like credit cards, than non-BNPL users. Though the CFPB doesn’t draw direct conclusions from this report, it suggests that BNPL users may be particularly financially vulnerable and should exercise caution around these apps.
Pros and cons of buy now, pay later apps
Consider these pros and cons when deciding whether to use BNPL for your next purchase.
No-interest financing.
No hard credit check.
Convenient payment option.
May encourage overspending.
Not a reliable way to build credit.
May charge fees.
Customer service issues.
Pros
No interest: Most BNPL apps charge zero interest for their pay-in-four loans. That means if you make all payments on time, you use the service for free. It’s rare to be able to finance a purchase, especially a bigger ticket item like a computer, at zero interest.
No hard credit check: Unlike applying for a credit card or loan, BNPL apps won’t usually conduct a hard credit pull, which can temporarily lower your score. Also, if you’re worried about a low credit score, you may have an easier time getting approved by a BNPL app than a traditional lender.
Simple, convenient and fast financing option: BNPL apps pride themselves on the simplicity and ease of their payment plans. Often integrated directly into the checkout process, applications are short and approval decisions are instantaneous, so you can opt into a BNPL payment plan within minutes.
Cons
Could encourage overspending: BNPL plans can make it feel like you’re spending less than you are. For example, if your budget for a purchase is $100 and you opt into a pay-in-four plan, you’ll only pay $25 upfront. For some shoppers, it may be tempting to go back and fill up their cart with more items.
Likely won’t be able to build credit: Most BNPL companies don't report on-time payments to the three main credit bureaus, so you won’t be able to build credit by using these plans. However, they may send past-due accounts to collections, which can hurt your credit score.
Fees: Though some BNPL apps won’t charge any fees, many do — especially if you miss a payment. Fees for late or rescheduled payments can range from $2 to $15, represent a significant percentage of the total and increase the cost of your purchase.
Customer service issues: Some BNPL users may have trouble settling disputes. For example, if you buy an item you need to return, you must deal directly with the store, even though your loan is through the BNPL lender. This can delay your refund.
Compare buy now, pay later apps
The best BNPL apps charge no interest for pay-in-four, have minimal fees and can be used at most major retailers.
As part of our editorial process, we collected hundreds of data points for six large BNPL apps. In the table below, see the overall star rating for each app, as well as key information about interest, terms and fees.
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Frequently asked questions about BNPL
What are buy now, pay later methods?
Buy now, pay later methods help you complete a purchase immediately, but pay for it at a later time, usually over a series of installments. You download a BNPL app to your phone, select a BNPL payment plan at checkout or opt-in to a pay-later option from your credit card.
What is the best buy now pay later app?
Some of the largest BNPL apps include Affirm, Afterpay, Klarna, PayPal, Sezzle and Zip. The best BNPL app offers no-interest loans with zero fees.
Which buy now, pay later app doesn't check credit?
All buy now, pay later apps check your credit with a soft pull, which won’t hurt your credit score. Even if you have bad credit, you can still be approved, since BNPL providers consider additional factors, like the cost of your purchase and any prior history with the company.
How does buy now, pay later make money?
Buy now, pay later providers make money in a few ways. One is by charging the merchant (aka the retailer you’re buying from) a fee each time the provider helps facilitate a transaction. Another is by collecting interest and fees directly from customers who take out a BNPL loan.
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