Some promotions may state that they are "buy now pay later no credit check" opportunities for consumers. These types of promotions may be found in mail order catalogs, online, or on television offers. Consumers need to be careful when obtaining this form of credit since it can very costly.
Be an Educated Buyer
This type of promotion sounds great. You can make purchases now and pay for them later, like a traditional line of credit, but without undergoing a credit check. The problem with this type of offer is the interest rate charged. Each offer will probably have the highest interest rate possible charged to you, usually well over 25 percent where allowable. The interest rate information is usually only provided in the fine print on the offer, making it difficult for consumers to recognize the risks. Before purchasing through one of these programs, understand the terms. Sometimes these offers are from reputable companies, but not always.
Take steps to protect yourself:
- Read the terms of the offer. If they are not easily found, contact the company and request them prior to doing business with the company. These terms must be provided to you prior to your application. The Federal Trade Commission outlines these laws and your consumer rights.
- Learn the interest rate charged. Many of these programs charge an exorbitant interest rate which could cut into any discounts received through special promotions.
- Inquire about fees. Some companies will establish a set-up fee to establish the account.
- Determine if there are any pre-payment penalties. Can you pay off the entire bill during a grace period? Is there a fee for doing so?
- Learn any stipulations, such as income qualifications or purchase minimums for obtaining the line of credit.
- Find out if the company reports to the credit bureaus. Adding a sizable debt to your credit report could harm your credit score.
- Determine who the lending bank is. Does the lender have a good customer service reputation? If you are not sure, visit the Better Business Bureau to learn more about them or research the lender online.
Make a Wise Decision
To protect yourself from scams or costly offers, simply learn as much as you can about the offer before buying into it. The buy now pay later no credit check may be a sound offer, but in some situations it could cost you more than securing another line of credit through traditional means and using that to make purchases.