Kuala lumpur: Buy Now, Pay Later (BNPL) schemes can affect credit risk scores and loan qualifications, Federation of Malaysian Consumers Associations (FOMCA) chief executive officer (CEO) Dr T Saravanan said. The impact on consumer financial records would depend on the way the data is reported, he added.
According to BERNAMA News Agency, BNPL use can influence a consumer's credit profile depending on how the data is recorded in the credit reporting system that acts as a reference for lenders. Dr Saravanan emphasized that timely payments are required to reflect good financial behaviour on behalf of the borrower, as late payments or failure to repay signals higher risk in the credit market. He pointed out that BNPL arrears can affect applications for housing, vehicle, or personal loans as financial institutions assess monthly commitments and the borrower's repayment patterns.
Dr Saravanan explained that even though not all large loans view BNPLs the same way, banks will assess monthly commitments and arrears that increase commitments and show cashflow pressures. In a practical sense, BNPL records will be counted when it appears in credit check sources and when the commitment affects the debt service ratio and borrowers' ability to pay.
With the new framework that makes it mandatory for BNPL providers to report consumer credit data to the Credit Reporting Agency via centralised databases, financial institutions will have an easier time examining BNPL patterns of use and borrower payment performance as part of their risk assessments. Dr Saravanan also highlighted the risk of uncontrolled spending, as the structure of small installments creates the illusion of affordability and encourages impulsive buying, especially when consumers juggle multiple BNPLs simultaneously.
Consequently, FOMCA is stressing the need for more practical financial education and structural protection, such as clear terms, stricter assessment of repayment ability, and effective complaints mechanisms to manage the risk of BNPL use, especially among youth.
Meanwhile, university student Nur Izzaty Yasin, 23, shared her experience with BNPLs, noting that while they helped users buy necessities without needing to pay in full at once, she faced difficulties in repaying the installments previously due to weak financial planning, resulting in additional charges due to late payments. She emphasized the importance of strong financial planning for BNPL users to avoid such issues.
Quality control operator Muhammad Adib Muhammad, 40, explained that BNPLs help reduce his financial burden when buying his children's school supplies. He mentioned that although he saves part of his monthly salary for these expenses, it isn't always enough, and BNPLs assist him in purchasing school shoes, uniforms, and stationery. He plans his expenses carefully and resorts to BNPLs only if necessary to avoid repayment problems.