Loanly, I'm Mr. Loanly... "Buy now, pay later" doesn’t sound as good as it used to. The days of near-zero interest rates and stimmy checks are gone, and it's hurting loan providers — from BNPL firms like Affirm to accessible lending platforms like Upstart.
Pay in installments?... Maybe nah. Lending boomed during the pandemic as extra-low interest rates made borrowing cheap — from home buying to online clothes shopping. BNPL firms like Afterpay, Klarna, and Affirm thrived by letting you buy those $700 Gucci loafers now and pay in installments later. Last year, Americans spent more than $20B through BNPL. Almost a year ago, Klarna hit a $46B valuation, becoming the second-most-valuable private fintech. Now:
When rates rise, BNPN wins… That’s “buy now, pay now.” Rising rates make loans more expensive — from credit-card debt to car leases — so consumers might start taking out fewer loans (hence: why Upstart slashed its forecast). Now the BNPL sector is being repriced to reflect that, and debt-laden Gen Zers are starting to turn against the services whose growth they fueled.