Late Payments Escalate for Buy Now, Pay Later Loans in the U.S.
A recent survey has uncovered a troubling trend in the rapidly growing Buy Now, Pay Later (BNPL) sector, with nearly half of users reporting late payments on their installment loans over the past year. The study, released by credit marketplace LendingTree Inc., highlights increasing financial strain among American consumers as they turn to these loans for everyday essentials.
Survey Reveals Widespread Payment Delinquency
According to the survey, which polled 2,049 U.S. consumers aged 18-80 in March and April, 47% of BNPL borrowers have paid late on at least one loan within the last year. This marks a significant increase from previous years, rising six percentage points from 2025 and 13 percentage points from two years ago. Furthermore, 54% of respondents stated they would struggle to make ends meet without these loans, underscoring their growing dependence on this financing method.
Growing Reliance on BNPL for Essentials
Amid rising affordability concerns and expectations of continued inflation, consumers are increasingly using BNPL loans for basic necessities. The survey found that 29% have used these loans for groceries, up from 25% a year ago and 14% two years ago. Additionally, 24% of borrowers now hold multiple loans simultaneously, a slight increase from 23% last year.
"This is just further proof of how many Americans are struggling with high prices today and looking for ways to make ends meet," said Matt Schulz, chief consumer finance analyst at LendingTree. "They're increasingly paying late, taking out multiple loans at a time and using these BNPL loans for essentials like groceries. None of that is a sign of a confident, thriving consumer."
Regulatory Landscape and Consumer Protections
The findings emerge as the BNPL industry faces reduced federal scrutiny. Last year, the Consumer Financial Protection Bureau (CFPB), which has seen its size and scope diminish under the Trump administration, revoked a measure that subjected many BNPL services to the same guidelines as credit cards. In response, seven state Democratic attorneys general sent letters in December to major providers like Klarna Group PLC and Affirm Holdings Inc., requesting details on loan costs and structures.
"As Trump rescinds critical protections for buy-now-pay-later consumers, it's up to states now to ensure shoppers know what they are getting into, and to ensure these companies are held accountable," Connecticut Attorney General William Tong stated at the time.
Explosive Growth and Future Projections
BNPL usage has skyrocketed in recent years and is projected to continue surging as an alternative payment method. Transactions using these installment loans are expected to reach $687 billion in volume by 2028, compared to $334 billion in 2024, according to Juniper Research. Schulz attributes much of this growth to the loans' ease and accessibility, noting that convenience, rather than the typically interest-free nature, is a primary driver of usage.
The survey corroborates concerns from lawmakers, financial planners, and consumer advocates about over-reliance on BNPL, signaling a need for greater awareness and potential regulatory action to protect consumers in this evolving financial landscape.
