Travel companies are starting to offering ‘buy now, pay later’ plans and while it may seem tempting to take a trip and pay for it later, you could face problems getting a refund if your flight is delayed or cancelled.
Daniel Iraheta has travelled to many countries, but has never been on a cruise. While planning his latest trip, he came across some loan options.
“I think it will be something that I will look into to be able to make this [trip] happen, which I’m really look forward to,” said Iraheta.
‘Buy now, pay later’ plans have become a popular way to pay for many goods and services, including things like appliances and online shopping purchases, and travel is turning into one of the fastest growing categories.
Offering quick approvals, no hard credit checks, and easy installment payments, it could seem like a dream way to pay for your vacation. But, Consumer Reports warns that these loans aren’t always smooth sailing.
“Unlike credit cards, buy now, pay later loans don’t always come with the same consumer protections. If your trip is canceled or delayed, getting a refund can be a nightmare, sometimes leaving travellers stuck making payments for a vacation they never took,” according to Lisa Gill with Consumer Reports.
And then there’s the fine print.
While some ‘by now, pay later’ plans do offer interest-free payments - typically split into four installments over two months - others also include conventional loans with interest rates as high as 36 per cent.
So, make sure you know exactly what you’re signing up for.
“Some consumers end up with unexpected fees or sky-high interest rates, turning what seemed like a good deal into a costly purchase,” said Gill.
Another issue? If your trip gets cancelled, you may still be on the hook for payments. If this happens to you, it’s recommended you reach out to the ‘buy now, pay later’ lender with proof that your refund is underway and ask to pause payments until it’s resolved.
“Sometimes you plan stuff, you make plans. They do not go as planned, but it’s always interesting. It’s, you know, adventures. I call it adventures,” said Iraheta.
If you decide to book a vacation using ‘buy now, pay later,’ take the time to read the fine print so you won’t get any unexpected surprises if your trip hits turbulence along the way.
If possible, use a credit card to book your trip as it will give you more protection including easier refunds and dispute resolution.
Another option is setting aside money in advance for your vacation then you won’t have a debt to pay when you get back home.
