Social media is increasingly riddled with an array of rants of customers who chose ‘buy now pay later’ schemes of ride-hailing apps and online marketplaces only to discover later that a loan was taken in their name without their explicit consent.
Consequently, their credit report showed that they owed loan to some obscure NBFC they never were engaged with, instead of Ola or Amazon – entities they directly dealt with.
Financial advisors, as a result, now advice that borrowers should stay abreast of credit reports and keep a tab on it from time to time. After all, you never know that there could be an outstanding loan in your name for a small payment which you could have paid anyway – but you decided not to — simply because an enticing offer was made to you i.e., buy now and pay later.
“You should keep checking your credit reports from time to time so that you are aware of any loan taken in your name either deliberately or unwittingly,” says Deepak Aggarwal, a chartered accountant and financial advisor.
“There are essentially four ways in which loan can show in your name. First, you borrowed the loan. Second, you are one of the guarantors or co-borrowers of the loan. Third, if you have chosen buy now, pay later (BNPL) scheme and lastly, if it’s the case of a fraud,” says Gaurav Chopra, co-founder, IndiaLends.
It's common for fintech platforms to entice customers to buy their favourite products now and pay later. Some of them tout them as an easy payment option whereas others such as CASHe explicitly call them ‘shopping loans,’ and rightly so.
Deepak Shenoy, CEO of Capital Mind, tweeted recently that buy now pay later are loans. From banks or NBFCs who can muck up your credit score. Jut be aware of what you are getting into.
Another user Lavanya Mohan wrote, "Buy now pay later is not innovation but, in fact, a trap."
Pranjal Sinha echoes the same sentiments when he wrote, "BNPL is a disguised way to give small loans. If users are not careful, it can have impact on their credit score."
One Ola customer, Aditya Agarwal, claimed that his credit score fell by 25 points although he never missed a single payment of BNPL. Much to his dismay, he was not aware that he had a personal loan from IDFC. When he called up the bank, he was told that Ola took a loan in his name.
What appears worrisome is that unique BNPL users in India are expected to increase 10-fold and total BNPL disbursements 16-fold to about $45-50 billion against $3-$3.5 billion in Nov 2021, according to HDFC Securities and reports by consulting firm RedSeer and others.
The easiest way to find out about loans linked to your PAN is to get a copy of your credit report. It carries details of all borrowings associated with your PAN.
Financial advisors say that it's important to make credit checks a regular exercise.