NEW YORK (WABC) — “Buy now, pay later” loans, or BNPLs, have become incredibly popular, rising 230% in the last two years.

These are loans that are generally interest-free and allow you to make a purchase and pay for it in four or five payments.

Sounds great, right?

Well, before you hit the plastic, pump the brakes. Nina Pineda of 7 On Your Side has the lowdown on these loans.

“Buy now, pay later. Lending has taken over the world,” said Lending Tree chief credit analyst Matt Schulz. “They’re everywhere. You can’t go to an online retailer without seeing them.”

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Schulz says her research at Lending Tree showed a big spike in these types of loans during the pandemic, as shoppers were enticed with offers to split payments into small chunks with just a few clicks as they browsed online carts.

“Unlike a credit card, which has interest rates that you don’t know exactly how much you’re going to end up paying in the end,” he said. “You know exactly how much you’re going to pay on a purchase now, pay off a loan later, and when that loan will end.”

Klarna, Afterpay and PayPal paved the way at BNPL, with Apple joining the trend by offering consumers a new way to pay. Recently, business-to-business BNPL investments have taken off as rising costs have companies small and large looking for ways to stay afloat.

For those of us looking to finance everything from designer glitches to a new speaker system, it’s easy to qualify.

It is not necessary to request a loan and, in general, you pay it in four equal installments every two weeks.

“That’s why everybody loves them, because they’re interest-free and predictable, because they’re installment loans,” Schulz said. “But the problem is that they are very easy to get and that makes it very easy to overspend.”

Matt says a BNPL is great for people just starting out with no credit history, but not so good for those of us who don’t pay bills on time.

The downsides are that it’s too easy to go into deep debt, get caught off guard by frequent payments, rack up late fees, and not understand return policies, which can make repayments difficult.

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“It’s a bit of a Wild West situation,” Schulz said. “So it’s important to look at the fine print with any financial transaction, but especially with these.”

Remember, just because someone is willing to give you these loans doesn’t mean you should accept them.

You can get into a lot of trouble if you start stacking them on top of each other, because while you don’t have to take a hard look at your credit to receive them, you better believe that missing a payment will hurt your credit score.

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