Save Now, Pay Later (SNPL)

If you are someone who keeps purchasing things online, you must already be aware of the Buy Now, Pay Later (BNPL) service.

BNPL is a type of short-term financing facility that allows you to make a purchase and pay for it over time without an additional cost.

But there is already an emerging alternative model to BNPL, i.e. Save Now, Pay Later (SNPL).

It is also known as Save Now, Buy Later (SNBL).

While no model is entirely perfect, BNPL carries an incredible credit risk.

SNPL has emerged as an alternative while addressing the previous challenges.

SNPL encourages saving, embraces investing and entreats buying.

But what exactly is SNPL? What are its benefits and its limitations? Is it useful for you?

Let's find out. 

What is Save Now, Pay Later (SNPL)?

Save Now, Pay Later (SNPL) is a short-term financing facility that allows you to save money each month with a seller, in order to purchase an expensive product.

Let's see how it works in more detail - a real life example. 

• Suppose you want to purchase a couple travel package for a week in China.
   
• A tour company is offering you just the deal you want at $2k, but you don't have that kind of money at the moment.
   
• What you could do is opt for SNPL facility here, given the merchant, i.e. the tour company, has partnered with a SNPL platform.
   
• You can deposit some money with the company each month, say $400 for the next five months each.
   
• Once the deposited sum has reached the target of $2k, you can avail the offer and go with your partner on your dream vacation to China.
   
• In turn, the tour company might give you a discount, an upgrade, or even cashback.

How is SNPL Different from BNPL?

BNPL is considered to be a radical alternative to SNPL as it asks you to save, rather than looking for a loan, so you can make a purchase that is deemed expensive...

We explore the crucial differences between the two of them.

Advantages of SNPL

As a pioneering fintech instrument, the main benefits of the SNPL service are:

• Perfect for customers who are looking for an option other than a loan or a credit to make an expensive purchase.

• Encourages a prudent and careful financial mindset that prefers saving instead of debt.

• Helps you build a healthy habit of saving for an expensive purchase, rather than offering instant gratification (which is offered by BNPL).

• Lets you avail exciting deals, giveaways, cashbacks, discounts, etc. at the end of your savings.

Disadvantages of SNPL

Even if the Save Now, Pay Later model offers many benefits, each and every financial instrument has its limitations.

The main cons of this business model are as follow:

• It could take you months or even years to save a certain amount for a product that you want to buy through SNPL. Keep in mind that the price of an item keeps fluctuating in the market.

  
   

• Often times, customers simply withdraw funds and cease saving in SNPL, as they get discouraged due to such a long waiting period.

  
   

• You cannot purchase a product that you require immediately. Suppose your smartphone gets lost and you need to buy another one on the spot. You wouldn't be able to wait for months to get it, right?

Frequently Asked Questions (FAQs)

a. What is Save Now, Pay Later (SNPL)?

SNPL is a short-term financing facility that allows you to save money each month with a seller, so that you can purchase an expensive product later.

b. Is SNPL different from BNPL?

SNPL presents itself as a radical alternative to BNPL.

The former asks you to save a certain amount in parts over a period so that you can make a purchase.

The latter, on the other hand, lets you purchase a product immediately via a loan as you repay the amount over time, though without interest.

c. What are the pros of SNPL?

SNPL encourages a savings mindset and saves you from falling into a potential debt trap. It is perfect for customers who are looking for a method other than a loan or a credit to make a purchase.