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How ‘Buy Now, Pay Later’ Makes Billions from ‘Free’ Loans

"BNPL" offers convenience at the potential cost of building debt.

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Nearly every online purchase these days is accompanied by an offer to “BNPL”: buy now, pay later. The video below looks at how companies like Affirm and Klarna are making a fortune on interest free loans while consumer watchdogs warn about the potential dangers of BNPL both to consumers and providers. 

Questions:

  1. How do BNPL companies like Affirm and Klarna make money on their interest free loans?

  2. Why do you think consumers with subprime credit scores are more likely to use BNPL services? What risks does this present both to consumers and providers?

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