I am talking more about the people lending the money, not sure why they think this would be sound lending. People will do far worse then default on a loan to keep eating.
Money is like stamina - you usually have much more than you think, but accessing it is not without a serious toll. Extreme example - you can probably sell an organ to cover your debt. And there is a wide spectrum of things you can do before reaching that point, many of them crossing the legal, ethical, and humane border.
The original BNPL creditors are not going to make you do them. They need to be legitimate, customer-facing businesses. But they can sell your debt to collection agencies, which will be more willing to put pressure on you. And if that doesn’t work - there are always gray market collectors to sell it to.
Oh, I guess I was assuming the vast majority of these folks (I’m one of them actually) are using credit cards, so the loaners don’t really know ahead of time.
Yeah, “buy now, pay later” usually refers to installment plan services like Klarna and Afterpay. Credit card companies have a different business model.
The business model for those services is basically to do all the shady shit that credit companies can’t do anymore because they’ve been around long enough to become regulated.
Going back to the original point about thinking people will be able to pay later. I doubt that’s the goal. My impression is that their income is meant to come from two places:
garnishing people’s wages forever and getting them on interest that they can never repay (won’t work on everyone, but maybe enough for margins)
laundering and selling these subprime loans by bundling them with better loans, like the mortgage industry pre-2008
Also odd to think people can put off eating until they have the proper funds.
I am talking more about the people lending the money, not sure why they think this would be sound lending. People will do far worse then default on a loan to keep eating.
Money is like stamina - you usually have much more than you think, but accessing it is not without a serious toll. Extreme example - you can probably sell an organ to cover your debt. And there is a wide spectrum of things you can do before reaching that point, many of them crossing the legal, ethical, and humane border.
The original BNPL creditors are not going to make you do them. They need to be legitimate, customer-facing businesses. But they can sell your debt to collection agencies, which will be more willing to put pressure on you. And if that doesn’t work - there are always gray market collectors to sell it to.
Oh, I guess I was assuming the vast majority of these folks (I’m one of them actually) are using credit cards, so the loaners don’t really know ahead of time.
I can’t open the article (forbidden) but I am also assuming this is about the new DoorDash and others eat now pay later crap.
Yeah, “buy now, pay later” usually refers to installment plan services like Klarna and Afterpay. Credit card companies have a different business model.
The business model for those services is basically to do all the shady shit that credit companies can’t do anymore because they’ve been around long enough to become regulated.
Going back to the original point about thinking people will be able to pay later. I doubt that’s the goal. My impression is that their income is meant to come from two places: