BALTIMORE — Everyday costs are climbing, leading more people to turn to buy now, pay later loans for everything from big-ticket items to groceries. However, new data shows more borrowers are falling behind on payments.
A LendingTree survey found 47 percent of users have paid late, an increase from last year. The number of people using these loans for groceries has doubled in just two years, and more than half of users say they have regretted using them.
Borrowers are using the service to make purchases feel more manageable, turning a $200 expense into $50 installments. Some users are carrying three or more loans at once, making it easy to fall behind as payments stack up.
Jessica Colon used a buy now, pay later service last year for the first time.
"I wanted to buy tickets for a concert, and concerts are just a little bit more money," Colon said.
Colon said the payments caught her off guard when she missed a reminder email from PayPal. Not wanting any more surprises, she paid off the balance after the second installment.
"I liked it because it was in advance, but then it did make me a bit more anxious," Colon said.
Colon knows how quickly debt can build. Several years ago, she accumulated $45,000 in medical debt after her younger son experienced unexpected health issues requiring procedures and labs. She switched from private practice to a new job with benefits, but the debt was already overwhelming.
"No matter how educated you are, you can't imagine when a huge medical expense comes in, how much it's going to destabilize you. And it could be anybody. It could be anyone," Colon said.
She turned to Money Management International (MMI), a nonprofit consumer credit counseling organization offering debt management programs. MMI worked with Colons' creditors to lower her interest rate and put her on a structured payment plan. It took her four or five years to pay off the $45,000.
"I feel incredibly relieved," Colon said.
That experience shapes how she thinks about any new debt, including buy now, pay later loans. She is not against the loans, but she is more intentional about when and how she uses them.
"The way I look at it, you should also enjoy your life. I'm not going to Turks and Caicos, I'm going to an Alanis Morissette concert," Colon said.
For those using buy now, pay later services, experts recommend keeping it simple by sticking to one loan at a time and ensuring payments can be covered before clicking buy. If there is a chance an item will be returned, using a credit card may offer more protection.
While more people report missing payments, the LendingTree survey also found many lenders may waive late fees if borrowers ask.
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