In the fast-changing world of technology, the iphone has managed to captivate the hearts and minds of young Indians like no other. When Apple unveiled the iPhone 16 series on September 9, a huge crowd gathered outside the Apple store at Mumbai’s BKC. The frenzy around the new release was undeniable.
Proudly wielding his new Apple device was 24-year-old Gaurav Kamat. He had waited for 17 hours in a queue outside the store. For Kamat, to own the latest iPhone is a cultural phenomenon. “The iPhone is not merely about utility but also about flaunting a stylish accessory that exudes status and trendiness,” says Kamat, who works in a media agency for a salary of Rs 28000. Every year he buys the latest iPhone and has been relying on the buy now pay later (BNPL) model.
BNPL is a short-term installment loan that lets you pay for purchases over time with no interest. However, this year to pay for the “stylish accessory”, Kamat has taken a loan of Rs 70200 that he has to repay across 12 installments.
And this is not the only loan Kamat has taken. He has to pay Rs 27,000 to Lazypay for Bose speakers that he had bought in late August. When asked about how he plans to repay Lazypay, he says,”I may have to take another loan or else pay the late payment fees.”
It is evident that gizmo-obsessed Kamat does not mind stretching payments out over months. He feels it is manageable, and “there is no risk of falling into a never-ending debt spiral”.
In 2021, the BNPL customer base for online and offline retail was five and two million, respectively. This is expected to surge to 30 million for online retail and 22 million for offline retail in the year 2026.
“It’s concerning that many young Indians are willing to take loans or settle for installment payments just to have the latest gizmo,” says xxx CA, adding that by providing customers with an alternative to upfront payments, BNPL models lure hesitant buyers to complete their transactions.
Stating that the BNPL model can be a great tool as they’re predictable, finite, often easier to get than other types of loans and often interest-free, the CA points out that they’re not without warts as BNPL loans may have late payment fees, high interest rates after the interest-free period, and penalties for missed payments. “They can stack up quickly, making it hard to keep up with payments. In most cases, this leads to accumulating debt and financial strain if not managed responsibly.”
The CA also warns that missed or late payments can negatively impact a consumer’s credit score, which can limit future access to credit.
For people like Kamat, being debt free can seem impossible.
“In case you are having to resort to loans to make ends meet, you need to take a very hard look at your expenses. If increasing your income is not possible then you must cut down drastically on your spending. Relying on credit cards, short-term loans, BNPL for monthly expenses is a very bad idea as they can lead to overspending,” says the CA Shashikant
In recent years, the concept of “Buy Now, Pay Later” (BNPL) has gained significant popularity among consumers. The BNPL market in India is expected to grow from $9.04 billion in 2023 to $19.814 billion by 2032. A key driver of this growth includes the growing need for BNPL services in the retail and healthcare sectors. Studies show that the most popular product to buy with BNPL in India is electronic products and smartphones.
