The rise of pay tomorrow for today’s pleasures

Buy now pay later services in Kenya are slowly becoming a new norm as they offer loans to individuals who need products, services and goods but lack the required amount in that given time. Basically, they get you through the purchase of goods and you pay later.

They help Kenyans get the “softlife” they so much want to live their best life today by enabling them to buy their dream products now and pay later in easy monthly installments.

Partnering with retailers

Through the loans, customers can furnish their homes, buy the latest mobile phones , new household appliances, electronics, IT gadgets or even go for a holiday. They have made this possible by partnering with retailers in the country. This gives customers a wide range of products that can also be delivered, depending on the loaning app used.

Some of the credit facilities charge the merchant a transaction instead of charging the borrower interest and this is how many of the loan apps operate. However, what’s more rampant in Kenya is the sale loan, where the borrower is offered an immediate loan to purchase whatever it is they need.

They have to apply and get qualified before they can receive the item and then pay overtime for an agreed period of time. Some of the companies offering such services include Aspira which even offers holiday packages, Faraja which is the most recent innovation from a partnership between Safaricom and EDOMx that provides consumers with credit to make-in store purchases at select merchant stories countrywide at zero interest. Also in the offering is Buy Now Lipa Pole Pole by Absa bank, which allows general utility shopping on credit and M-Kopa by Safaricom which offers help in buying smartphones.

To get started with BNPL services , all you need to do is sign up for BNPL facilities. This involves filling out an application form on their website to get a credit limit. With this, they probably get to know customers’ current income, salary, average expenses, credit worthiness and other financial commitments.

After applying, BNPL facilities review your application. This involves a credit check. They’ve developed  proactive strategies to assess your Credit Referencing Bureau history and financial capabilities. They even go ahead to request for additional information such as M-PESA statements and bank statements for the last six months which gives them more insights and information to allocate a limit.

This warrants at least a 24-hour wait. Once your application is approved, you will be notified of your credit limit. This limit will determine the range of products you can purchase. Afterwards you can now visit any of BNPL`s retail partner stores to shop for your desired products.

You choose a payment plan that suits your budget where you can opt to pay in affordable monthly installments over a period of up to 12 months. The payment cycle will commence 30 days after the purchase. Payments can be made conveniently through the payment methods provided by the BNPL facilities.

In recent years, the buying now paying later models have gained widespread popularity. A big chunk of its successes can be attributed to technological advancements since most can be accessed via mobile devices.

The marketing strategies put in play too seem to be working accordingly since the levels of awareness are quite good. These services have certain similarities to the higher purchase models that were there some years ago by companies such as Kenya Credit Traders, African Retail Traders etc.

Read also: In a first, Absa credit card offers buy now, pay later options

Luxury of instant purchases

However, Hire Purchase is no longer in its glory days as people realized it was very costly and they’d end up paying almost double the buying price. In addition, increased access to low interest financial services from banks and financial institutions gave the final blow to Hire Purchasing since it would be way cheaper to take out a loan and buy the item someone wished to get.

The BNPL cases offer convenience and financial flexibility and that seamless blend appeals to today’s consumers who seek immediate gratification in the name of “soft life”. These platforms offer them the luxury of instant purchases to get the latest iPhones or Samsungs without the burden of upfront costs. With flexible payment plans that  allow them to divide expenses into manageable installments, they find themselves eagerly taking the options.

The Buy Now Pay Later models also offer the benefits of little to no interest, freeing people from the shackles of high interest bank, sacco credit facilities. It also comes in to bridge the gap for people who lack access to conventional credit cards or loans. It’s been seen to be more appealing to the younger generations who instead of getting loans opt for this instead.

As the model rides its wave of popularity, consumers are urged to take some measures of caution. While it offers immediate gratification and manageable payments, the allure must not overshadow careful financial assessment. In today’s  world that prioritizes convenience, getting the balance between seizing opportunity and making good  financial choices remains essential.

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