Are Point of Sale Loans Worth it?

In the modern world, it is nearly impossible to envision monthly living without some kind of consumer or POS finance. A poll found that during the COVID-19 pandemic, 60% of participants used a buy now, pay later service. Consumer financing services are becoming more comfortable, and clients are given a variety of financing alternatives at the point of sale since the shopping experience is improving and every type of store is now available online.

We’ll talk about POS financing and evaluate its viability.

Point of Sale Financing

With point-of-sale financing, you can pay for a purchase by dividing the total cost into a plan with predetermined monthly payments. Numerous third-party lenders collaborate with merchants to provide point-of-sale financing for both online and in-store purchases, including ChargeAfter, Affirm, and Klarna.

Each lender may have different point-of-sale loan conditions. Additionally, the terms of their financing arrangements may differ, particularly in terms of interest rates and repayment terms.

How does it Work?

Point-of-sale financing may resemble other finance choices, such as a mortgage or car loan, that you may be familiar with.

A retailer is often the one to provide a point-of-sale loan. It includes a loan agreement that details payments and the loan’s terms and conditions, as well as an application and a credit check. You will typically pay an initial, initial payment at checkout after your application is approved, get the item, and then make periodic payments over a period of six to twelve months.

Regarding the BNPL, several top platforms also provide POS financing and other consumer financial choices as white-labeled services. For example, the ChargeAfter lending platform provides POS financing for a large number of merchants or retailer stores that sell more expensive goods and are targeted more for POS financing than the BNPL option. The platform also provides white-label BNPL services so the brand or retailer company can provide POS financing under their name. They can do this by expanding their business and elevating their brand thanks to a tried-and-true platform.

Buy Now Pay Later

A common method of purchasing smaller things with point-of-sale financing is Buy Now, Pay Later (BNPL). It is a fast and more comfortable way of financing cheaper items. For instance, in case of leading companies, like ChargeAfter, you can simply apply online BNPL or in-store BNPL option, and get financing in a couple of minutes. That is why it became appealing to consumers.

The merchant will automatically bill your credit or debit card every week, every two weeks, or every month using BNPL until the entire purchase is paid for.

Difference between POS financing and BNPL

Consumers might utilize point-of-sale finance to buy a new stove but a BNPL loan to buy a new pair of sneakers. BNPL loans are used for smaller purchases. Additionally, BNPL loans have quicker payback schedules than point-of-sale loans.

Since BNPL financing has a laxer approval process than other point-of-sale loans, BNPL loans are simpler to qualify for. Sometimes, requesting a BNPL loan doesn’t even result in a hard credit investigation.

The Financing Process

Basic details like your name, birthdate, and Social Security number will be gathered by lenders to examine your credit. Just so you know: Compared to BNPL loans, point-of-sale loans might need a higher credit score or more stringent underwriting guidelines.

Following approval, you’ll agree to make payments according to a plan, such as once per month for three months, for instance. There will be language in the agreement regarding late payments. Nobody will be surprised by the text, which often states that late payments will incur a cost.

You might be assessed interest for some point-of-sale loans. Rarely is it true of BNPL loans?

If you use point-of-sale financing to purchase something, you might not immediately receive a refund if you return it. Until the return is finalized, you’ll probably need to keep paying your regular payments.

For large, one-time purchases, point-of-sale loans might be worthwhile, especially if you don’t have a credit record. Point-of-sale finance can be a frugal method to use short-term debt for a bigger purchase as long as you pay your bills on time.

When should you apply for POS financing?

If you lack credit or have a spotty credit history, point-of-sale financing may be a useful option for you. However, you shouldn’t constantly employ point-of-sale financing just because you are eligible for it.

Consider saving point-of-sale financing for more significant, one-time purchases that you can afford to pay back with ease.

Furniture financing in-store or online is a fantastic illustration of POS finance. Some people attempt to avoid any finance for the straightforward reason that the costs are too high. A consumer must pay fees with every payment made while using a traditional financing option, such as credit cards or installment loans. Contemporary consumer finance companies also charge various fees. Therefore, the company to whom you intend to apply for consumer finance should be one of the key factors in your decision. The global lending platform of ChargeAfter, which is incorporated into many local and online stores, provides BNPL and POS finance solutions. The financing tool from ChargeAfter is also available on the websites of many furniture retailers.

Simply put, if you want to buy $3000 worth of furniture but don’t have the money or don’t want to pay it all at once, you can apply for POS financing and pay according to the prearranged payment schedule. This method of split payment will result in a final payment of precisely $3000, so you don’t pay anything extra.

Disadvantages of Point-of-Sale Financing

Point-of-sale financing may appear to be a simple way to get what you want without having to pay for it right away at first appearance. While that is true, you should take into account the drawbacks of point-of-sale financing.

  • Interest Fees – The most obvious drawback is the prospect of paying a high-interest rate, which would increase the price of the item you bought above its sticker price.

Naturally, as we already indicated, you don’t pay anything extra when using leading platforms, but other financing platforms require additional payments that clients must make on their behalf. However, some people believe that paying the same amount each month, even if there are no additional fees, can have a negative impact on your budget. However, in this day and age of financing and split payments, we can’t picture life without it.

  • Hidden Fees – Hidden fees or other terms in the fine print are another drawbacks of point-of-sale financing. Among them are late payment penalties, which are frequently flat fees of $10 or $35 or percentages of the loan balance.
  • Credit score – Point-of-sale financing may also have an effect on your credit score; this effect may be favorable or unfavorable. Point-of-sale financing might improve your credit score if you pay your bills on time. Financing will lower your credit score if you don’t make your payments on time. If your credit rating is poor, be aware that when you submit applications for credit, a lender will run a hard inquiry, which will temporarily lower your score.
  • Problem with Returns – If you made the purchase using point-of-sale financing, returning an item can be more difficult. Although you technically purchased the item from a merchant, it was probably funded by a different financial institution. It’s possible that you will need to keep making payments until the refund is finalized.

POS Financing Alternatives

Point-of-sale financing isn’t your only choice if you want to make an immediate purchase while spreading out your payments. Two popular substitutes to point-of-sale loans are listed below:

  1. Credit Cards – Some credit cards have interest rates that are 0% for an extended period. Interest rates on credit cards are a drawback. The rate of interest on the card will increase when the introductory 0% period expires.
  2. Personal Loans – A personal loan is yet another option for point-of-sale financing. A personal loan’s interest rate might be cheaper than a point-of-sale loan’s interest rate, but you won’t find one with a 0% initiation fee. Personal loans should typically be used for larger expenditures rather than frequent little purchases. Typically, their underwriting criteria are more stringent. Your lender will need collateral to secure the loan if it is a secured personal loan.

How to Apply for POS Financing

Today, point-of-sale financing is an easy component of the majority of purchases. While some businesses collaborate with a third-party lender, such ChargeAfter, Affirm, Klarna, Afterpay, and Sezzle, others use their point-of-sale financing services.

Check out the lender to be sure they are reputable and will protect your personal and credit data before you register for point-of-sale financing. Read their conditions carefully, paying great attention to the fees, interest rates, and loan terms.


To sum up, we can only state that employing some form of consumer financing is a need in the modern world. Modern examples include POS financing and BNPL choices, and when used properly, they make it simpler to manage your finances and make purchases without blowing all of your money at once.

There are undoubtedly certain disadvantages for them, but this is true of all forms of finance. Therefore, if purchasing without consumer financing is not an option, we must select the best option; at the moment, POS financing and BNPL services are at the top of the financing heap.

Therefore, you can apply for one of the reliable platforms, like ChargeAfter, and be confident that your data is secure and that you are getting the best services on the market if you want to use POS financing services for any item or the BNPL option for less expensive products.

About ChargeAfter

ChargeAfter is a leading multi-lender platform for Buy Now Pay Later (BNPL) Consumer Financing. It connects businesses with the most reliable lenders, enabling them to offer customers the greatest financing solutions. With the best system of Waterfall Financing, ChargeAfter guarantees BNPL lending to every shopper, by matching the most relevant lender to every client. Using the unique consumer financing technology, ChargeAfter provides all parties, merchants, lenders, and consumers, with the best shopping experience.  Phoenix, MUFG, VISA, Bradesco, BBVA, Synchrony, PICO Partners, CITI, Propel Venture Partners, Plug and Play, and other companies worldwide are among the investors of ChargeAfter.

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