“‘Buy now, pay later’ options, payday loans and credit cards are particularly attractive to those on tight finances, but the terms of payment, fees and interest paid are largely underestimated or misunderstood,” said MNP President Grant Bazian, who noted an increase in Many Online – Dealers offer the options. “[T]These loan options benefit lenders because of high interest costs and various processing and / or late payment fees the longer people stay in debt. “
Taking Canadians’ financial health into account, the company found that 46% of respondents, up two percentage points from the previous survey, said they are $ 200 or less away from not being able to meet all of their financial commitments , including more than a fourth (27%) said they already weren’t making enough money to keep up with their bills and debt payments.
Fifty-two percent of respondents said they were concerned about how rising interest rates would affect their financial situation, and just over a third (35%) said they were concerned that higher interest rates would drive them into bankruptcy.
Rising rates are of particular concern given the current low interest rate environment, which ironically makes half of Canadians (49%) more relaxed than usual about bearing debt. Another three in five Canadians (58%) said low interest rates give them the opportunity to buy things that are usually beyond their financial reach. This could be the motivation leading 38% of Gen Z respondents and 27% of Millennials to say they are likely to consider BNPL options before the end of the year.
The temptation to use BNPL solutions could be particularly great given affordability concerns pervasive across the country. 45 percent of Canadians surveyed said that it is becoming less and less affordable to feed themselves and their loved ones; a third said the same about housing costs.