Ada Slivinski: Financing used to be reserved for big, necessary purchases. Now, you can get instant online loans to buy everything from chandeliers to makeup.
It started innocently enough.
I was browsing Wayfair for a new chandelier. The one that caught my eye cost enough to give me pause; it might take a couple months to work it into my budget. Then, in the fine print below the price, I spotted a promotion for PayBright, a service that would apparently allow me to “pay as little as $62 a month,” for that same chandelier.
According to Tech Company News, ”PayBright is a Canadian provider of instant consumer financing at the point of sale. They partner with merchants and allow them to offer their customers instalment financing as a payment method. Customers can pay for their purchases in affordable monthly payments, while the merchants receive their funds up front from PayBright.”
The company’s President and CEO Wayne Pommen said they have partnered with over 2,500 merchants across the country. It’s similar to the US-based Afterpay model, which supports companies like Anthropologie and MAC Cosmetics.
You could be paying for that makeup for months.
The appeal for customers is that sometimes the finance rate is 0 per cent, which means the merchant covers the cost of these services as a promotion and the consumer doesn’t pay more – as opposed to if they were to use a credit card and pay interest over those same few months to pay it off.
For businesses, these services reportedly improve the conversion rates of online shopping. It makes sense; instead of me waiting a few months to buy that chandelier, Wayfair could make that sale now.
The downfall of course is many customers are already up to their ears in debt. Canadians’ debt-to-income ratio is currently hovering at over 177 per cent. $62 a month may not seem like a lot, but if it means you’re making purchases earlier than you can afford them and maybe adding on more items than you need because those small monthly payments seem more manageable that trying to digest the actual amount, the service may spell trouble.
Appliance stores, hardware stores and mattress marts have long offered financing and store-brand credit cards, but this is the first time we’re seeing this type of point of sale financing for small products like dresses and makeup.
What might make sense for those essentials we need – a home, a car, a mattress and washing machine – is now available for the “want” purchases.
While tempting, the research scared me off the purchase…for now. After all, as the saying goes, if it sounds too good to be true, it often is. “Shop Now, Pay Later,” seems to fall into that category.
I’m going to go the old-fashioned way, practice some self-restraint and keep telling myself it’s for the best.
Ada Slivinski is the Founder & Principal of Jam PR, a boutique agency focused on helping small businesses get big exposure. You can reach her at firstname.lastname@example.org
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