The Consumer Financial Protection Bureau published a report on buy now, pay later (BNPL) borrowing that finds BNPL use in 2022 was widespread and often involved multiple concurrent pay-in-four loans, with activity concentrated among consumers with subprime or deep subprime credit scores and higher balances on other unsecured credit. Using a matched sample of BNPL applications from six large firms and deidentified consumer credit records, the report estimates that 21.2% of consumers with a credit record financed at least one purchase with a BNPL loan in 2022, up from 17.6% in 2021. About 20% of borrowers were heavy users originating more than one BNPL loan per month on average, and average originations rose from 8.5 to 9.5 per borrower. Multi-loan use was common, with 63% of borrowers taking out multiple simultaneous BNPL loans at some point during the year and 33% borrowing from multiple BNPL lenders. Nearly two-thirds of BNPL loans went to applicants with subprime or deep subprime credit scores, and BNPL lenders approved 78% of loans to these applicants; the analysis also links BNPL use to higher balances across other unsecured debt products and shows credit card utilization rising before first-time BNPL use. Among borrowers aged 18 to 24, BNPL purchases represented 28% of total unsecured consumer debt during months with borrowing, versus 17% across all age groups.
Consumer Financial Protection Bureau 2025-01-13
Consumer Financial Protection Bureau report finds BNPL use rose to 21.2% in 2022 with most borrowers holding simultaneous loans
The Consumer Financial Protection Bureau's report reveals widespread use of buy now, pay later (BNPL) loans in 2022, with significant activity among consumers with subprime credit scores. It highlights that 21.2% of consumers financed purchases with BNPL loans, with 63% taking multiple loans simultaneously and 33% borrowing from multiple lenders. BNPL usage is linked to higher balances on other unsecured debts, particularly among younger borrowers aged 18 to 24.