The popularity of buy-now-pay-later (BNPL) apps is growing rapidly, as are defaults and delinquencies. The slump in job markets and wage growth, alongside the high cost of borrowing due to elevated inflation, have already strained household budgets. Easier access to credit and flexible repayment options also lure younger generations to tap into loans even when it is avoidable. Significant savings and a clean repayment record should likely offset any risks associated with your existing liabilities when you apply for a loan. However, Lou, 22, was surprised when her mortgage application for a $500,000 home was denied, and a $16 debt on an Afterpay BNPL account was among the reasons.
Lou is a final-year commerce and IT student at Macquarie University in Sydney, Australia. She also works full-time in the tech industry. In the three years she has used credit products, Lou has never missed a loan repayment deadline and diligently saved up $100,000 for the downpayment on her first home.
