Klarna in focus: Buy Now, Pay Later – How safe is buying in installments?

Klarna in focus: Buy Now, Pay Later – How safe is buying in installments?

In recent years, the “buy now, pay later” (BNPL) financing model has become increasingly important. This concept allows consumers to order goods online and pay later, often through partial or installment payments. According to information from MDR BNPL at Klarna includes two different products, each of which offers different conditions and repayment modalities.

Tobias Berg, Professor of Banking at the Goethe University Frankfurt, explains the differences clearly. The first product represents the classic purchase on account, in which the goods are initially delivered and the consumer has to make payment within 30 days. This type of purchase falls under the Consumer Credit Directive and is considered debt. Purchasing on account is widespread and can be used regardless of financial problems, meaning that around a third of e-commerce sales are processed this way.

Installment payments and their challenges

In contrast to this is the second product, the real “buy now, pay later” model. The repayment takes place in installments over periods that can range from a quarter to a year or longer. It's important to note that this installment payment approach only accounts for around five percent of eCommerce sales. Consumers need to think carefully about the amount of the installments and their ability to repay them.

As the BaFin Additionally, credit-based payment methods can also be offered for smaller amounts, which can sometimes lead to careless actions. Consumers are often tempted to make purchases that they may not be able to afford, especially in times of financial stress. It is therefore advisable to keep a close eye on your own financial possibilities before taking out such a loan.

The legal classification of BNPL models depends heavily on the content of the contract, which can relate to loans, installment transactions or deferral agreements. Consumer protection regulations also apply to credit-based payment methods, including the need for credit checks. In the case of partial payments, the financing can usually only be terminated if there is a significant shortfall and after a deadline has been set.

Tips for responsible use

A key point that consumers should pay attention to is the consumer protection regulations, which do not apply to amounts under 200 euros or if they are fully repaid within three months. Therefore, buyers need to be able to judge for themselves whether they can afford the purchase, especially if there is no credit check. To avoid debts and financial problems, BaFin recommends the following tips:

• Finanzielle Möglichkeiten im Blick behalten (Kontostand, Fixkosten, Ausgaben).
• Finanzierungsangebote vergleichen (effektiver Jahreszins, Laufzeit).
• Gesamtsumme aller Zahlungen im Auge behalten, nicht nur die Raten.
• Pünktlich zahlen, um Verzugszinsen und Mahngebühren zu vermeiden.
• Einnahmen und Ausgaben in einem Haushaltsbuch notieren.
• Vorsicht bei Zusatzprodukten, die über den aktuellen Bedarf hinausgehen.

Overall, it shows that with the “Buy now, pay later” model, careful planning and awareness of one's own financial possibilities are crucial in order to avoid unexpected debts and possible financial overload.