SAN DIEGO (KGTV) – We’ve all the heard the term "buy now, pay later" for things like clothes, shoes or other items.
According to the nonprofit Protect Borrowers, a July survey found that nearly 6 out of 10 people under 45 use buy now, pay later services.
“It used to be that buy now, pay later plans were reserved for luxuries; things like electronics or furniture or clothes, things along those lines,” said Alan Gin, economics professor from the University of San Diego.
But it's now being applied to how you can pay your rent by some companies. From that survey, 33 percent of those buy now pay later users use it for rent or housing costs.
“But now, if you're using for rent, you're using it for necessities. So, to me, that shows that people are more stressed out, financially, than they have been in the past,” Gin said.
ABC 10News reached out to him about the concept of buy now, pay later being applied to people’s rent.
“It's a mixed bag. It's useful to help smooth out income. A lot more people are now working in the gig economy or as freelance people instead of receiving a regular paycheck, so their income is more volatile, and this will help you then smooth out those fluctuations in income. The problem is it comes at a high cost,” Gin said.
A February study from Protect Borrowers claims some of these products are using "hidden fees and contractual traps to take advantage of consumers.”
ABC 10News found some companies do have different fees for this service, and they are displayed on their help pages on how things work for them. There are some that say they do not charge interest or fees for the rent-related services.
Gin told ABC 10News consumers need to take those fees into account when thinking of doing this.
“The key is these fees, which, which again, on a short-term basis, just translates into a high effective interest rate, even if they don't call it uh interest,” Gin said.
