Buy Now Pay Later loans can face late fees and interest rates of 30%. Veuer's Elizabeth Keatinge has more.
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00:00Buy Now, Pay Later is a type of short-term financing that allows consumers to split their purchases into multiple, often interest-free, installments.
00:09A Wells Fargo report showed that Pay Later loans totaled $24.4 billion in 2021.
00:15As Wells Fargo economists explain, it's not a revolving line of credit.
00:19Each loan is tied to a specific purchase, and lending terms are generally easier.
00:24Installment loans can provide credit to some who might not otherwise qualify.
00:29However, if you are late on payments, you could face late fees and interest rates around 30%.
00:35Most BNPL lenders don't report to credit agencies, so it's hard to definitively tell the status of these debts.
00:43The Wells Fargo economists say BNPL isn't a problem yet.
00:47Quote, but until there is a definitive measure for it, there is no way to know when this phantom debt could create substantial problems for the consumer and the broader economy.
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