Easy Money – But Is It Really So Easy?

One of the most popular trends currently in the banking sector is online credit facilities. Some apps/ websites allow buyers credit so that they can purchase now and pay later at their convenience. 

How Does Online Credit Work? 

Apps that provide such options (like LazyPay) partner with merchants to provide such an option. For example, LazyPay has partnered with 250+ merchants such as MakeMyTrip, IRCTC, PVR, Swiggy, BookMyShow to allow its users to enjoy easy online credit options on a wide spectrum of purchases/ services. 

All you have to do is sign up with LazyPay, choose to shop with a partnered merchant and use the ‘Pay Later’ or ‘Cardless EMI’ option on check-out. OTP will be requested from first-time users only. Users also enjoy easy repayment options with full repayment in 15 days or split into EMIs at zero cost/ affordable interest rates. 

Growth Model 

According to LazyPay’s official website[1], it has disbursed credit worth more than INR 500 crores. A report by Credit Suisse Group AG[2] estimates India’s digital payments market to grow to $1 trillion by 2023. 

The concept of buying now and having to pay later is catching up with the population today especially during these tough times where the COVID-19 pandemic has hit the economy. Along with easy EMI options, simply saving money and accruing interest for 15 additional days holds great appeal to many users today. 

Difficulties In Online Credit 

The fees and penalties charged on account of missed/ delayed payment are huge. The late payment interest rates can be very high leading to a debt trap sort of situation. While advertisers market zero additional cost, your credit profile, amount of credit, and repayment option chosen do have an impact on the actual interest rates given. 

Credit bureaus are authorised to collect financial information about a person/ organisation and assign a credit rating describing the creditworthiness of that individual/ organisation. 

Taking a debt, repaying the debt and missed payments can have a large impact on the credit ratings. As per Mint, Simpl doesn’t report its users to credit bureaus but ePayLater and LazyPay have the authority to do so. Thus, regularly missing payments could have a negative impact on user credit scores. 

While online credit can help solve your short-term credit crunch situation, one should take care not to start treating online credit as a crutch to a dire financial situation. 

In the current generation, we are facing a situation of normalising instant gratification. Combined with online credit options, it is easy for buyers to let loose and purchase even unnecessary items beyond their financial capability. This will lead them to a debt trap where they are constantly in debt and repaying debt with interest only to get into debt again. 

It fosters a behaviour of indulgence that may not be financially sustainable. While this option is very useful during emergencies, lightening up monthly expenditure burden (such as groceries) and the occasional indulgence towards fine dining or vacation; users need to exercise control and caution to keep themselves in check. 

Download the LazyPay app, get your credit limit and enjoy making those purchases like you never have !!!