Many millennials are using financing in order to obtain the things that they want. They choose this option because they do not want to use cash or a credit card. Paypal and many other major companies have given consumers the option to finance their purchases.
Studies have shown that millennials are less likely to use credit cards than their parents. The average millennial has two credit cards whereas the average baby boomer has three cards. Generation X members have an average of 2.5 credit cards.
Paypal has two financing options for people. They have an option of getting Paypal Credit. If you choose this option, then you will not have to pay any interest for six months. Select retailers will not charge you interest if the purchase is over $99. You also have the option of selecting Easy Payments. This allows you to pay for your purchase by making equal payments every month. You will be charged 19.99 percent in interest if you do not pay the purchase off within one year.
You will have to undergo a credit check before you are approved for financing. This may temporarily reduce your credit score because it is considered a hard inquiry. However, you will not have to undergo a second credit check when you make purchases in the future.
Even though financing is a convenient option, it can still be a risky one. Many people have ended up in debt because they paid for things that they could not afford. Even though you can make payments over the course of several months, there are several things that may come up that can prevent you from making the payments. For example, you could lose your job or have a health issue. That is why financial experts recommend that you avoid making purchases that you are unable to afford.