Understanding more about Buy-Now-Pay-Later or EMI Programs

Estimated read time 8 min read

Benefits of An Easy Monthly Installment program

One of the benefits of Easy-monthly-installment (EMI) or buy-now-pay-later (BNPL) programs is that they provide a flexible shopping experience that allows consumers to pay for their purchases later if they choose. Customers have the option to pay for the items now and return them within 30 days if they’re not satisfied with the product. The program can help merchants achieve their goals of improving customer service, lowering costs, and increasing revenue.

Consumers want to try on shoes or fabrics before making a final decision, and buy-now-pay-later specialists have helped them do this. These retailers also offer free returns and dedicated customer support to make the experience as convenient as possible.

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While the concept of paying later is not new, it has only recently become more popular and profitable for merchants. Despite these challenges, buy-now-pay-later programs continue to gain traction.

Artwork by Getit. qa. Used with permission.

A merchant can add a buy now, pay later option to their website by working with a payment gateway that supports this option. A good example of such a payment gateway is QNB’s Flexi Plan program. This payment gateway makes accepting installments much easier and offers a pay-later option that can help improve the conversion rate of an e-commerce website. It allows shoppers to purchase larger ticket items, as well as check out with a larger cart size, and has become a trend in today’s online shopping.

Here are some efficient ways to pay your EMI on time,

  • Plan your budget: If your EMIs exceed your monthly budget, it is better to reduce unnecessary expenses. Spend less on luxuries such as clubbing, movie outings, and expensive dining. Use credit cards as little as possible. Credit cards have a higher interest rate and can increase your debt load unnecessarily. By doing all this, you can better plan your finances.
  • If your income increases, increase your EMI accordingly: Be a smart borrower and maximize your repayment amount. Debt repayment is made easier with this strategy. For a better understanding, here is an example. Assume that your monthly income increases by 10%. In this case, you can increase your monthly payment by 4% to 5%. In the same way that you increase your investment, you may also increase your EMI. As soon as you have extra funds on hand, you should prioritize prepaying your loans.
  • Have you been burdened with a high-interest rate loan? Is your debt status worsening because you are not paying your EMI? Don’t worry about it. Life insurance policies and PPFs can now be used as collateral for loans. From the third year of investment, investors can borrow against the balance of a PPF. In any case, the same amount must be returned within three years. Paying off your dues may also require you to break your mutual fund investment or your FD. If you have an FD earning 8% interest and a loan earning 15% interest, it would be wise to liquidate your investment and pay off your debt.
  • Debt consolidation: Too many loans can make it difficult for you to manage your finances and keep up with your EMI payments. If you miss an EMI, you will not be penalized but your creditworthiness will also be affected. Debt can be reduced, however, if you can secure a loan at a lower interest rate consolidation may be a viable option for you. Consolidating debt may be a viable option if you can secure a loan at a lower interest rate. With this loan, your interest rate is significantly lower than what you’re paying now on your existing debt. Reorganizing your debt will allow you to pay it off faster and decrease your total debt. In case you are unable to pay your credit card dues, you can apply for a personal loan. Unlike credit cards, personal loans have significantly lower interest rates, making them easy to repay in full.
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Risks to keep in mind

One of the major downsides of buy-now-pay-later programs is that they can damage credit scores if payments aren’t made on time by the buyer or the customer. In fact, a survey conducted by credit reporting company Credit Karma revealed that more than a third of consumers had fallen behind on payments. Moreover, a growing number of consumers are becoming vulnerable to debt due to the growing popularity of BNPL. In fact, two-thirds of BNPL users are subprime borrowers who are especially vulnerable to economic shocks and downturns.

To avoid this, customers can opt to pay late fees or turn in recurring deposits to their credit card accounts from another account on the day when they get charged by the banking institution.

To sum up, here are some of the benefits of paying an EMI on time

  • Improves credit score 
  • Saves you from the penalty 
  • Option to avail of a top-up loan 
  • Strengthens relationship with your bank and the shop/ merchant 

Rules and Regulations

In a recent paper published by the Stanford-Vienna Transatlantic Technology Law Forum, Diana Milanesi outlined the concerns surrounding buy-now-pay-later programs. She pointed to the growing importance of consumer protection laws and the exploitation of personal information by payment providers.

Regulatory arbitrage and data harvesting are also among the concerns and this paper argues that buy-now-pay-later programs should be regulated in order to protect consumers.

Qatar’s Best Online Store: Getit.qa

Many providers have also started offering apps that enable shoppers to use installment payments in person. However, a growing number of consumers are becoming vulnerable to debt due to the growing popularity of BNPL. In fact, two-thirds of BNPL users are subprime borrowers who are especially vulnerable to economic shocks and downturns.

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Costs of an EMI program

BNPL/EMI programs offer consumers a convenient way to spread the cost of a purchase over several weeks or months. They are increasingly popular among consumers, especially millennials.

learn about Buy-now-pay-later in Qatar by Steffi's blog on goddyarts.com

BNPL companies integrate with retail businesses and allow consumers to choose interest-free (0% interest) payments. However, consumers must be aware of the costs associated with these services, including late fees and hidden fees. But the costs of using these services are largely worth it for consumers who can afford them. The advantages of this service have many critics.

Understanding Customer Convenience

Many consumers would rather purchase big-ticket items using installment payment plans rather than a credit card. They want more control over their purchase and are less likely to get sticker shock when the bill comes. In addition, BNPLs can attract new customers and increase average basket size. They are also useful for businesses that offer recurring payments. However, the convenience factor is not a universal one. It varies depending on the buying and shopping habits of the customer.

According to a survey, 57% of users regret making purchases they were unable to afford. A high percentage of users are behind on payments, and half expect to make late payments within the next 12 months. In addition, two-thirds of consumers believe EMI/ Buy Now, Pay Later programs are risky. The primary challenge of EMI/ BNPL providers today is to create options where the customer can avail such programs with minimal risk and as convenient as possible.

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Whether the consumer is buying from a brick-and-mortar store or a website, convenience is crucial. Almost two-thirds of consumers would pay more for convenience than for price. For example, 66% of consumers would pay extra for delivery services. And one-quarter would pay more for more than one delivery option. Moreover, convenience can be a key selling point, especially in certain industries like clothing. It is convenience that makes customers more likely to buy from a retailer.

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0% Interest Plans on Getit.qa

Getit.qa, Qatar’s best online marketplace, has an effective easy-monthly-installment program on their store.

Qatar’s Best Online Store: Getit.qa

Though it is limited to holders of QNB (Qatar National Bank) credit cards (except corporate cards), it unleashes a wide potential for customers who are looking for big-ticket purchases from Getit.qa.

Currently, the EMI program offered by QNB has 4 different payment tenures (periods) i.e. a customer can pay back in 3 months, 6 months, 9 months, or 12 months which he can ask for these, prior to delivery by the company.

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Key Takeaways

Considering your financial situation before taking out a loan is a good idea. Under no circumstances should your monthly EMI exceed 50% of your gross income. Your ability to repay your debts can be affected by an unforeseeable event at any time. Finding solutions that allow you to pay EMI online is the best thing you can do in these situations. Utilize this EMI opportunity to improve your credit history and open the door to future borrowing opportunities.

So even though EMI plans are good, make sure they fit your budget and you pay on time to get the best out of these programs.

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