2020 has been a challenging year for most industries, the lending sector being no exception to this; having to manage and adapt its operations to COVID-19, and the financial implications it has brought to many across the globe.
However, whilst having a significant impact on many people’s financial difficulties, the global pandemic is not the only challenge the industry has seen in this year.
Throughout 2020, “Buy now, pay later” products have become increasingly more popular, now no longer used just for the larger items like furniture, but many now using them to pay for much smaller online purchases.
This year has seen a surge of major companies start to offer this type of finance, letting people “buy” items with credit that is required to be paid back “later”, typically in monthly installments – JMP Securities analyst David Scharf reporting to CNBC “”There’s no question this is on the rise,”
“The application of pay later in a digital environment has definitely gained traction.”
However, while on the surface this form of lending may seem harmless enough, it can come with some pretty substantial risks. If borrowers fail to keep up with repayments on Buy Now, Pay Later schemes, they could end up damaging their credit score, or be charged high interest and fees. A spokesperson from instalment lender, Pheabs, commented:
“While Buy Now, Pay Later products have become a hugely popular form of credit, it’s vital for consumers to be aware of the risks that can come along with it, and to make sure providers are offering an adequate level of customer service and support if borrowers start to face financial difficulties.”
The Importance of Customer Service and Support
Whatever type of loan product offered, be it personal loans, guarantor products or debt consolidation, providers are still part of a customer service industry, of which has high expectations not only from consumers, but also regulators.
Therefore, it’s vital for lenders, regardless of the loans product they’re offering, to pay close attention to the customer service and the support they offer, as this helps to promote better borrowing practices, loyal customers, glowing recommendations and ultimately a great reputation for the business.
With Buy Now, Pay Later products, it’s been reported that the ease of signing up, combined with their popularity, may be distracting away from the fine print of agreements. Therefore, with this newly popular product, providing informative guidance and support when it’s needed could not be more important in helping to prevent consumers from worsening their financial situation.
While Buy Now, Pay Later appears to be one of the latest borrowing trends, as markets change along with borrowing behaviours, one trend we hope to see never come out of fashion is the respect and attention on serving and supporting the customer.