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15-09-2022, 08:06 PM
By KEN SWEET
an hour ago
NEW YORK (AP) — Americans have grown fond of “buy now, pay later” services, but the “pay later” part is becoming increasingly difficult for some borrowers.
Buy now, pay later loans allow users to pay for items such new sneakers, electronics, or luxury goods in installments.
......
as the industry racks up customers, delinquencies are climbing. Inflation is squeezing consumers, making it tougher to pay off debts.
......
“You have an industry with a higher concentration of subprime borrowers in a market that hasn’t been effectively tested through (this type of economy), and you have a kind of a toxic brew of concerns,” said Michael Taiano, an analyst with Fitch Ratings, who co-wrote a report in July highlighting some of the concerns with the industry.
......
as delinquencies are rising, and companies are being more aggressive in marketing their products, advocates see a need for additional regulation.
......
The industry is growing rapidly
......
Americans took out roughly US$24.2 billion in loans on buy now, pay later programs in 2021, up from only US$2 billion in 2019. That industry-wide figure is only expected to jump even more.
......
Another concern among advisers and consumer advocates, as well as Washington lawmakers and regulators, is the ease with which consumers can layer on these installment loans.
......
“Ads encourage consumers to use these plans for multiple purchases, at multiple online stores — racking up debt they cannot afford to repay,” Brown said.
The short-term loans are potentially problematic because they’re not reported on a consumer’s credit profile
......
Buy now, pay later took off in the U.S. after the Great Recession (Levin's note: Specifically the US Subprime Mortgage Crisis). The product, analysts said, largely has not been tested through a great period of financial distress, unlike mortgages or credit cards or auto loans.
https://apnews.com/article/inflation-tec...9aa22ca276
......
an hour ago
NEW YORK (AP) — Americans have grown fond of “buy now, pay later” services, but the “pay later” part is becoming increasingly difficult for some borrowers.
Buy now, pay later loans allow users to pay for items such new sneakers, electronics, or luxury goods in installments.
......
as the industry racks up customers, delinquencies are climbing. Inflation is squeezing consumers, making it tougher to pay off debts.
......
“You have an industry with a higher concentration of subprime borrowers in a market that hasn’t been effectively tested through (this type of economy), and you have a kind of a toxic brew of concerns,” said Michael Taiano, an analyst with Fitch Ratings, who co-wrote a report in July highlighting some of the concerns with the industry.
......
as delinquencies are rising, and companies are being more aggressive in marketing their products, advocates see a need for additional regulation.
......
The industry is growing rapidly
......
Americans took out roughly US$24.2 billion in loans on buy now, pay later programs in 2021, up from only US$2 billion in 2019. That industry-wide figure is only expected to jump even more.
......
Another concern among advisers and consumer advocates, as well as Washington lawmakers and regulators, is the ease with which consumers can layer on these installment loans.
......
“Ads encourage consumers to use these plans for multiple purchases, at multiple online stores — racking up debt they cannot afford to repay,” Brown said.
The short-term loans are potentially problematic because they’re not reported on a consumer’s credit profile
......
Buy now, pay later took off in the U.S. after the Great Recession (Levin's note: Specifically the US Subprime Mortgage Crisis). The product, analysts said, largely has not been tested through a great period of financial distress, unlike mortgages or credit cards or auto loans.
https://apnews.com/article/inflation-tec...9aa22ca276
......
