| Overview: Compare buy now pay later (BNPL) services with personal loans to understand which option suits your financial needs. Learn about loan amounts, repayment terms, interest rates, and credit score impacts to make informed borrowing decisions in India’s evolving digital credit landscape. |
The Credit Choice Dilemma for Indian Borrowers
India’s digital lending market is evolving rapidly, with buy now pay later (BNPL) services gaining popularity alongside traditional personal loans. This growth reflects changing consumer preferences for quick, digital-first credit solutions.
With increasing smartphone penetration fuelling adoption of both buy now pay later and digital personal loans, Indian consumers now have multiple credit options. But can BNPL truly replace traditional personal loans? The answer depends on your specific financial needs and borrowing goals. Each serves different financial needs, and choosing the right one can save money and protect your credit score.
Understanding Buy Now Pay Later Services
Buy now, pay later platforms allow you to split purchases into smaller, interest-free instalments. Popular in India for online shopping, these services typically divide payments into 3-6 parts over 30-90 days.
Key BNPL features:
- No interest charges if paid on time.
- Instant approval with minimal documentation.
- Purchase limits are usually between ₹500-₹50,000.
- Primarily for consumer goods and services.
BNPL services have certain limitations. Late payment fees can be substantial, and missed payments may impact your credit score. The convenience can also lead to overspending, as the psychological impact of smaller payments masks the total cost.
Personal Loans: The Traditional Credit Option
Personal loans offer structured borrowing for larger expenses like medical emergencies, education, or home renovation. Unlike BNPL services, personal loans provide substantial amounts with fixed repayment schedules.
Personal loan characteristics:
- Loan amounts range from ₹10,000 to ₹9,00,000.
- Fixed interest rates starting from 12.75% p.a.
- Repayment tenure of 3-60 months.
- Comprehensive credit checks required.
The personal loan application process has become increasingly digital, with platforms like Airtel Finance offering paperless applications and 24-hour disbursal. This bridges the gap between traditional banking and modern convenience. Download the Airtel Thanks App today and browse loan options right from your phone!
BNPL vs Personal Loans: Key Differences
Here’s a simple comparison of BNPL and personal loan features.
| Factor | BNPL | Personal Loan |
| Loan Amount | ₹500-₹50,000 | ₹10,000-₹9,00,000 |
| Repayment Period | 30-90 days | 3-60 months |
| Interest Rate | 0% (if paid on time) | 12.75% p.a. onwards |
| Credit Check | Minimal | Comprehensive |
| Documentation | Almost none | Basic KYC documents |
| Best For | Small purchases | Large expenses |
| Did you know? BNPL transactions in India are expected to reach $175 billion by 2026, reflecting the increasing popularity of short-term credit among digital-first consumers. |
When to Choose Which Option
Choose BNPL when:
- Making purchases under ₹25,000.
- You can repay within 3 months.
- You want to avoid interest charges.
- The purchase is non-essential.
Choose personal loans when:
- You need amounts above ₹50,000.
- Repayment needs to be spread over years.
- You’re funding essential expenses.
- You want predictable monthly payments.
| Pro Tip: Use BNPL for smaller, planned purchases like shopping or electronics when you expect income soon. Opt for personal loans for bigger needs like medical bills, education, home repairs, or business expenses. |
Making the Right Choice for Your Finances
Buy now, pay later cannot fully replace personal loans because they serve different financial needs. BNPL excels for small, short-term purchases where you want to avoid interest charges. Personal loans remain essential for larger expenses requiring structured, long-term repayment.
The key is matching your credit choice to your specific situation. For immediate small purchases, BNPL offers convenience. For major life expenses, personal loans provide the amount and flexibility you need. Airtel Finance offers personal loans with competitive rates starting from 12.75% p.a. and quick disbursal within 24 hours, making it suitable for urgent larger expenses that BNPL cannot cover. Check your eligibility today to see which option aligns with your current financial capacity.
FAQs
1. Can BNPL services handle large purchases like home appliances?
Most BNPL platforms limit purchases to ₹50,000. For larger appliances, personal loans offer higher amounts with structured repayment plans.
2. Do buy now pay later services affect credit scores?
While some BNPL providers don’t report to credit bureaus, late payments or defaults can negatively impact your credit score.
3. What happens if I miss BNPL payments?
Missing BNPL payments typically results in late fees of ₹100-500 per instance, plus potential credit score damage and service suspension.
4. Can I use both BNPL and personal loans simultaneously?
Yes, but ensure you can manage multiple repayments. Track due dates and amounts to avoid missed payments affecting your credit score.
5. Which option builds a better credit history?
Personal loans build a stronger credit history through regular EMI payments reported to credit bureaus, while BNPL loan reporting varies by provider.
