Credit & debt · Module 8 of 8
Paying in pieces
Buy now, pay later and interest-free instalments: when they’re really free, and when they get expensive fast.
Key terms in Paying in pieces
- Buy now, pay later
Buy now, pay later, or BNPL, is point-of-sale credit that lets a shopper split a retail purchase into a few scheduled payments. The most common form is a four-payment loan with no interest. Providers may earn money from merchants and from late fees, and the Consumer Financial Protection Bureau has studied how the loans are disclosed and used.
Source: Consumer Financial Protection Bureau, The Buy Now, Pay Later Market
- Deferred interest
Deferred interest is a credit card promotion that advertises no interest if a purchase is paid in full by the end of a set period. Interest still accrues in the background from the purchase date. If any part of the balance remains when the period ends, the accumulated interest is added to the account, often at a high rate.
- Installment loan
An installment loan is a closed-end loan in which the lender provides the full amount at the start and the borrower repays it in fixed amounts over a set period. Payments are generally the same throughout the term. Personal installment loans are used for large purchases, unexpected costs or consolidating debt, and can run from a few months to several years.
Source: Consumer Financial Protection Bureau, What is a personal installment loan?
Every term on Lever is in the money glossary.
About this module
Paying in pieces is part of Credit & debt, one of 15 subjects in Lever. It’s a short run of 5 lessons, about 13 minutes in all, so you can finish it in one sitting.
Every lesson takes one idea at a time. You read it with the math worked out step by step, answer a question that puts it to use, then see why the right answer is right and why the others aren’t.
It’s for anyone who was never taught this, and you don’t need to know anything first. Every lesson is free. Lever works out what you already know, so you can start here or let your path bring you to it.
More in Credit & debt
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1
What a balance actually costs
How credit cards charge interest, when carrying a balance is free, and when it starts costing you every day.
9 lessons -
2
The number they look you up by
What your credit score is, what goes into your credit report, and the habits that move the number most.
8 lessons -
3
What a loan is made of
Where each loan payment goes, the fees hiding outside the rate, and how to compare two offers fairly.
7 lessons -
4
Which debts are worth it
Secured versus unsecured debt, borrowing that builds something versus borrowing that doesn’t, and loans built to trap you.
7 lessons -
5
Clearing what you owe
Two proven ways to pay off debt, the cheapest and the easiest to stick with, plus how balance transfers work.
6 lessons -
6
Changing the deal you already signed
Your debt isn’t set in stone. Negotiating, refinancing and consolidating, and what each one costs.
5 lessons -
7
What the loan actually bought
When a car or a degree loses value faster than the loan shrinks, and how to avoid owing more than something is worth.
7 lessons
Try this module
It’s part of Credit & debt. Lever will bring it to you when you’re ready, or you can go straight there.