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Buy Now, Pay Later Alternatives

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Buy now, pay later (BNPL) financing can make expensive purchases more attainable for many consumers, but it’s not without its downsides. Studies have shown that these services have led some consumers to overspend, and many were late on payments as a result. Additionally, many BNPL services don’t help to build credit. It’s for these reasons that some consumers may seek buy now, pay later alternatives.

Other forms of credit — such as credit cards, personal loans and personal lines of credit — can help improve your credit score, and may even offer benefits that some BNPL services don’t offer. Here’s what you need to know about the risk of buy now, pay later services and what your other options are.

What is buy now, pay later?

Buy now, pay later is a popular type of payment plan to help shoppers afford some purchases. According to a 2021 LendingTree survey, about a third of consumers have used BNPL services in the past.

BNPL apps and sites allow consumers to break their payments into multiple installments that they can pay back over a designated period of time. Some of the most popular BNPL platforms include Affirm, Afterpay and Klarna, though which service you use will likely depend on the retailer.

Here are some of the most common forms of buy now, pay later:

  • Pay in 4: This is the most popular service that BNPL platforms offer. Instead of paying for their item up front, consumers have the option to split their payments into four installments that will be paid every two weeks.
  • Pay in 30 Days: This option allows consumers to order an item and see it in person first before paying for it. With this type of plan, shoppers will have 30 days to choose whether they want to keep the item and pay for it, or return it to the retailer.
  • Monthly payments: Monthly installments are typically for larger purchases and work similarly to personal loans. You may have to submit to a credit check and may have to pay interest with this form of BNPL.

Buy now, pay later pros and cons

While BNPL platforms offer many benefits to consumers, there’s still risk involved in this type of financing. Consider the following pros and cons before committing to a buy now, pay later purchase.


  No interest on Pay in 4 purchase plans

  Typically no impact to your credit score

  May make expensive items more affordable

  May have to pay interest with monthly installment plans

  Some platforms may not help grow your credit

  May lead to overspending for some consumers

Pros of buy now, pay later

BNPL platforms work like mini loans, so it may be easier for consumers to afford their purchase by paying in installments. With some BNPL plans, consumers are able to finance purchases without the added cost of interest charges.

And because most BNPL companies don’t perform hard-credit checks, shoppers can get access to a line of credit without it damaging their credit score. Plus, some BNPL platforms may even help some consumers build their credit.

Cons of buy now, pay later

Unfortunately, BNPL platforms aren’t without their drawbacks, and it may be worth it to consider other forms of financing.

In the previously mentioned 2021 LendingTree survey, researchers found that 2 out of 3 consumers who use BNPL services believe it resulted in them overspending. Another recent LendingTree survey showed that 42% of consumers have made at least one late payment, and as a result, were charged a late fee or interest, adding to their overall cost of borrowing.

In addition, some companies charge convenience fees per installment, and others don’t report your payments to the credit bureaus, which can make it tough to build your credit.

Buy now, pay later vs. credit card

If you already have a credit card, you may find it to be a better option than buy now, pay later financing.

If you’re able to qualify for a 0% annual percentage rate (APR) credit card, you can even skip out on paying interest, which is one of the benefits of using BNPL. If you don’t have a credit card with 0% APR, you can avoid paying interest by paying off the balance every month.

Because credit cards are typically unsecured — meaning they don’t require collateral — your ability to get approved for a credit card with a low interest rate will depend heavily on your creditworthiness.

Credit cards may be best for consumers who are able to obtain a credit card with 0% APR or a low interest rate. This may also be a better option for consumers who want to take advantage of the rewards their credit card offers, such as travel points or cash back.

Type of creditBNPLCredit card
APRTypically doesn’t charge interest on Pay in 4 plans, though interest may apply to monthly installment plansTypically charges variable interest rates
TermsCommonly runs six weeks, though other plans may be 30 days or several monthsCredit is on a rolling basis so there is no set end date
AmountsMinimum and maximum purchase limits depend on platformAmount of credit may depend on creditworthiness and payment history
FeesMay charge late fees and convenience feesMay charge annual, late and over-the-limit fees

Buy now, pay later vs. personal loans

Because BNPL platforms work similarly to personal loans, these two financing methods share a lot in common. For instance, both types of loans have a set term in which the entire balance will need to be repaid.

However, personal loans tend to offer much higher amounts to consumers and may be a good alternative when it comes to large purchases. Unlike BNPL financing, however, personal loans sometimes come with origination fees that can be taken out of the total balance of your loan.

Personal loans also typically have more flexibility as to how funds are used compared to BNPL apps. Personal loans are typically unsecured and can be used for the following reasons:

  Debt consolidation

  Credit card refinancing

  Paying off medical bills

  Home improvement projects

  Planning a wedding



Personal loans may be best for consumers who are working on improving their credit, since most lenders report payments to the credit bureaus. These loans may also be better for those who need a larger sum of money and already have an idea about how much money they’ll need. (Visit LendingTree’s personal loan marketplace to compare lenders and get prequalified.)

Type of creditBNPLPersonal loan
APRDoesn’t typically charge interest on Pay in 4 plans, though interest may apply to monthly installment plansDepends on credit worthiness but can be as high as 36%
TermsCommonly runs six weeks, though other plans may be 30 days or several monthsTypically ranges from 24 to 60 months
AmountsMinimum and maximum purchase limits depend on platformTypically ranges from $1,000 to $50,000
FeesMay charge late fees and convenience feesMay charge origination fee (1% to 8%) and late fees

Buy now, pay later vs. personal lines of credit

A personal line of credit is a form of financing that works similarly to a credit card and often comes with a variable interest rate. Like credit cards, a personal line of credit offers revolving credit in a capped amount, and you only have to pay interest on what you spend.

Personal lines of credit are typically split into a draw period — when you can spend from the account — and a repayment period. This form of financing is usually unsecured.

However, a personal line of credit can be challenging to obtain unless you have a good relationship with a financial institution — being a customer with a checking or savings account, for example.

Personal lines of credit may be best for those who are already in good standing with a lender and need more flexibility when it comes to loan amounts.

Type of creditBNPLPersonal line of credit
APRTypically doesn’t charge interest on Pay in 4 plans, though may with monthly installmentsMay depend on credit worthiness and are typically variable rates
TermsCommonly runs six weeks, though other plans may be 30 days or several monthsOffers a draw period and a repayment period which may vary from lender to lender
AmountsMinimum and maximum purchase limits depend on platformTypically $1,000 to $100,000
FeesMay charge late fees and convenience feesMay charge annual and withdrawal fees

Other buy now, pay later alternatives

While the options listed above are three common buy now, pay later alternatives, they aren’t the only options on the market. Here are several other routes to consider if want to finance a purchase:

  • Secured loans: A secured loan is a type of personal loan that requires a borrower to put down valuable collateral, like a savings account or vehicle. This type of loan can be a good option for those with bad credit who would have difficulty qualifying for a personal loan otherwise. However, keep in mind that if you’re unable to keep up with the payments on your secured loan, your lender can legally seize the collateral you put down to recoup their losses.
  • Home equity loans/HELOCs: If you own a home and have been paying your mortgage for some time, chances are that you’ve built equity into your home. Home equity loans and home equity personal lines of credit (HELOCs) allow you to borrow against your home’s equity (up to a certain percent). Remember that your home will be used as collateral for this type of financing, and if you fail to make the payments, you could lose your home.
  • Paying cash: Saving your money to pay cash for a purchase is the safest option, as there’s no risk of overspending or getting trapped in debt. And while cash purchases won’t help you build credit, you’ll avoid interest payments and have peace of mind knowing that you own the item outright.

Frequently asked questions

Buy now, pay later may be a good option for some consumers. It can help shoppers afford purchases that they would otherwise struggle to make. However, buy now, pay later financing can lead to overspending if shoppers aren’t careful with their budget. Just because you’re able to split up the cost of an item doesn’t mean you’ll be able to afford it.

While some BNPL companies may report your payments to the credit bureaus, many do not. Therefore, it can be hard to build credit through BNPL financing.

Some BNPL companies will conduct credit checks on consumers before approving them, though most lenders use soft-credit checks that won’t impact your credit score.

While there’s generally no guaranteed approval when it comes to lending and financing, some BNPL sites may be easier for some consumers to receive approval than others, depending on their credit score.

If you’re a consumer with a low credit score and you’re concerned about your chances of being approved, you may consider BNPL companies that do not conduct credit checks, like Zip (formerly Quadpay).


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