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- cross-posted to:
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For people locked out of homeownership, “Buy Now, Pay Later” has become a way to finance basic expenses — with future income that may not actually materialize. The Trump administration, meanwhile, is busy protecting the lenders.
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how do we fuck over these lenders 🤔
By doing mass debt strikes where everyone stops paying at once.
It’s like that meme about if you owe the bank a thousand dollars it’s your problem but if you owe the bank a billion dollars it’s the banks problem.
Everyone stopping payments at once in aggregate is the billion. Suddenly the lender is insolvent real fast and they are spending money to chase the money they are owed on top of it.
So who are the most vulnerable lenders?
According to the article, Klarna posted a nearly $100M loss in Q1. So I suppose people just keep doing what theyre doing, at the expense of their own credit I guess
Characterizing this as the lender’s fault is kind of silly though. Were talking about people buying door dash and cochella tickets on 0% interest credit. If anything its surprising the lenders are stupid enough to offer that in the first place. If you buy door dash on those terms and dont pay it back on time, its hard to see that as predatory in any way. Thats not remotely similar to a subprime loan on a car or a payday loan
I’ve read about people increasingly using these services not for leisure expenditures like delivery and concerts, but for basic needs like groceries. Salon said 25% of users are in this camp, and meanwhile 78% of Americans live paycheck to paycheck.
Yes, you’re right that there’s an element of personal responsibility in taking on debt. But the fact of the matter is that most people are pretty low in financial literacy, and also that declining real wages increasingly put people in a situation of using debt to pay for basic needs.
Im certainly aware many people are using it for real necessities too, but even then I take issue with a 0% interest 3-6 month loan being labelled as “predatory”. A 0% interest 6 month loan is borrower-favorable at worst, and downright kindness by the lending company quite frankly. And they dont even really penalize as harshly as they should considering they are basically taking a loss on the initial loan.
And some might say “well they take the loss on the loan to trap people in debt”, but only 17% of their income is generated by penalty payments. Really Klarna is best described as a business that is doomed to fail because its terms as a lender are too kind on borrowers. I just dont see how people can call them a predatory lender. Like yeah, they primarily loan to people who cant get normal credit, but the alternative would be those people having access to no credit. And the terms are clearly not predatory. So I dont see why people are up in arms against them
0% interest is not really accurate in the laypersons sense though. They make money off of “fees” that totally aren’t interest, they’re just the equivalent to payday loan type interest if you calculated the rate. Some are within affordability if you pay quickly but skyrocket after the 90 day mark as well.
I don’t disagree with your assessment of the terms, but again, it goes back to financial literacy. Most people are not budgeting their expenditures, and they think, “I can afford $20 a month,” and then “I can afford $40 a month,” over and over until they end up with hundreds of dollars in loan payments, even at favorable interest terms. When those payments are built up because people can’t pay their grocery bill, that’s all the worse. Relying on July’s income to pay for May’s groceries, and you’re not even living paycheck to paycheck. You’re living on a paycheck two months away.
Should people be more financially literate? Yes. Should they exercise more personal responsibility in budgeting and approach to debt? Of course. But in reality, most people just don’t have the knowledge base to evaluate financial decisions the way that you and I probably do.
There’s also a psychological factor. Taking out a personal loan at the bank is an entire process, with agreement documents and trips down to the branch. There is more time to evaluate and second-guess your decision. But now you can take on debt with one click of a button on a check-out page. Lowering that barrier makes it all the easier for people who already struggle with financial literacy to act on impulse and incur more debt.
It’s something that everyone should be cautious about, including people who better evaluate their financial decisions, because eventually it can affect us too. Car repo rates are at their highest levels in 15 years. Delinquency on consumer loans has been steadily increasing since 2021. When inability to pay debts reaches a critical level, you get a financial collapse like we had in '08. So I think it is worth considering, even if the terms of an individual loan are favorable, whether making it so easy for people to take on debt is healthy or sustainable in the context of the broader economy.
We can however blame the lenders for continuing the dumbass practice of Collateralized Debt Obligation bundling after 2008 though. With these damn loans that’s really playing with fire if they start carrying down onto people’s mortgages as credit card debt did in '08. Which seems likely given I think the Wall street types think Trump will give them a bailout instead of being a fucking saditst to people who he perceives as having wronged him.
buy not repaying debts owed.
Crazy opinion. But you can simply not buy uneccesery shit for borrowed money.
Before anyone busts out the good old “but people buy necessities!!!”
Sometimes sure. But often not.
who knew that applying ‘buy now, pay later’ to absolutely everything in life would backfire???
you’re not going to get out of debt by choosing to pay later for everything.
