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Comment by dcchambers | Hacker News Reader

One of the most valuable life lessons my parents ever taught me was "If you can't afford it now, you can't afford it at all."

YES, there is a time and place for financing (especially when interest rates were near zero and you have good impulse control) but the entire "buy now pay later" industry just reeks of preying on people that aren't as financially literate or have little impulse control, and I won't touch the companies with a ten foot pole.

Honestly a bit disappointing to see this from Apple.

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I used to have this opinion, and I try to take as little debt as possible. However, I've change my opinion in recent years, and I now think it's based on a privileged position that not everyone is in.

Buying a new phone today rather than once I've saved up is a luxury, but buying a replacement phone today rather than being without a phone for ~months while saving up could bring with it significant costs – making it harder to access employment, healthcare, or to socialise. Similar examples would be things like car repairs.

Cash flow is worth something, businesses have known this forever, and people living paycheck to paycheck are typically experts in how to make their money work as well as possible because they're so close to the edge. I trust them that if they think this is the best option for them, it probably is. Payday loans are in the same category here (and businesses call them "commercial paper").

Now, I'd love to live in a society where this isn't necessary, but that's not the world we live in, so I'm in favour of these things being available for those who need them.

A more practical version of this rule is "don't use long term debt to pay for short-term expenses"

When buying a car, or house, or maybe something like a phone that you will use continuously for a number of years, you can make an argument that it's OK to pay for that item over the same time period.

Where people get into more trouble is buying consumable stuff like clothes, food, etc. on to a credit card that they don't pay off every month, and then they end up paying for a box of macaroni or package of underwear over many years (at typically double-digit interest rates).

Yes, goal should be to use debt to buy appreciating assets, not depreciating ones.

Payday loans are in the same category but in terms of predatory financial options i feel as though they are a million times worse. I even question how apps like Dave work on this type of model.

If your laptop breaks and you need a new one you are probably better off doing BNPL if you can instead of buying a cheap, crappy one now.

Well it's actually boiled down to if you make money with your laptop. I guess most people on HN are programmers so of course they do. But the question is not good laptop vs crappy laptop, it's consumption vs investment.

What do you’re a student in uni? Averagely, Your laptop won’t make any money until you graduate , get a job , and pay off your loans.

It says “Apple Pay users can split purchases into four payments with zero interest and no fees.”

Seems like a good deal – Apple is giving away money for free, especially given current interest rates.

The BNPL industry isn't some big charity. They offer such deals to hook people in, knowing that a huge chunk of them will miss payments and then they can hit them with interest and fees.

Actually that's not how they make their money, and arguably is a distraction from their real money maker.

https://www.bitsaboutmoney.com/archive/buy-now-pay-later/

Great link. But I assume Apple BNPL is not collecting 300bps extra processing fees from any and all merchants that accept Apple Pay.

Exactly. However, I think a bigger advantage of this business model is that it simply sells more stuff. It’s way easier to look at your monthly take home income and justify $100 per month for 12 months than a 1 time purchase of $1200. However, the problem is when you make those justifications, it becomes easier to make 10 of those purchases and achieve a debt-income ratio of 5.0 instead of budgeting and keeping a lower debt-income ratio over time.

> It’s way easier to look at your monthly take home income and justify $100 per month for 12 months than a 1 time purchase of $1200.

I think you should note that for apple, they are splitting payments into 4 over 6 weeks. So your example wouldn't fit the discussion we're having here.

Thank you. That is exactly how people do in countries where splitting payments have been established and common for a long time, making everybody live on the edge in order to prop up consumer spending.

If you actually save your money to only buy things when you can afford them, you can more easily purchase more expensive stuff with cash, since you've already saved up a chunk, and you are also much better prepared for unexpected costs.

The lesson I taught myself is to amortize everything so it's thought of as $/time. An upfront purchase has an opportunity cost.

Also, most people can't pay for a house upfront. Mortgages are effectively govt-subsidized, so you usually want one anyway. I directly care what the house will cost me per month, and the bid price is only part of that.

I initially purchased my new iphone 12 in monthly installments, yes I could have paid for it outright, but I didn't see the point in paying ~1k upfront.

If you're referring to a carrier's zero interest payments on the full price of the phone, that's just smart. No penalty for borrowing. If there was interest involved, it gets fuzzier.

I'll amend this by saying that there's also another huge requirement for it to make sense: The new iphone must be necessary for any of this deal to make sense. If it was impulse bought because of this financing offer, then the financing has cost you >$1k

Apple does it as well, for all(?) of their products now.

no interest 12/24 month payment tied to apple card.

One often forgotten problem is the poor security of carriers. If they have all your financial details for credit purposes they will be leaked.

Last I checked, my carrier (T-Mobile) charges like 10% more than Apple for the same device. They're just baking the interest into the price, it's not really "no interest". Maybe the others don't do that, though, I dunno.

Exactly. Taking a 15-30 year loan to buy a house makes sense. Using Affirm or Klarna or Apple Pay Later to buy groceries or a new laptop does not.

>> Honestly a bit disappointing to see this from Apple.

They can't raise prices on the latest iGoodies if no one can afford to buy them.

Buy Now Pay Later can ensure users "can afford" the latest iGoodies instead of having to wait for the price drops on not-the-newest iGoodies.

They are being innovative and enabling their own business to succeed despite the current economic conditions.

This is probably sarcasm, but, financing for iGoodies has been available for years. That's not what this feature is :)

I agree in spirit but buying things in installments is just a reality here in Brazil and in a lot of other countries.

It's a loan like any other. When used correctly it can be a democratizing function for people who are poor but need important things like phones, fridges, and stoves.

The interest rate on this is zero:

> Apple Pay users can split purchases into four payments with zero interest and no fees

It sounds suspicious tho. So who takes the risk?

Miss one of those interest free payments and I suspect it gets expensive very quickly.

You think Apple is lying about this? Or you think that they are hoping that you miss payments and then they (a three trillion dollar company) are going to make a material amount of money on an interest penalty?

> You think Apple is lying about this?

No of course not. I'm not saying Apple is lying.

> Or you think that they are hoping that you miss payments and then they (a three trillion dollar company) are going to make a material amount of money on an interest penalty?

Maybe? I don't know how much banks make from this kind of thing. That "(a three trillion dollar company)" comment is so irrelevant that it's almost laughable tho. Banks are huge companies too, and they still make money from interest.

Yes, banks are large precisely because they make money this way. The point is that Apple makes huge amounts of money by selling tech products and services, and by having a loyal following. It would be surprising if they decided to trade some of that goodwill for a relatively (in their world) amount of cash.

Essentially, Apple. Goldman is getting their pay in transaction fees. Apple is hoping to increase the number of purchases made on Apple's products. You get cash back on each transaction, Goldman gets a percentage of each transaction, Apple just loses a tiny bit of their profit on the sale, but they still made the sale. The only issue then is that debt collection is more expensive. The truth, however, is that most people pay their debts.

If you have impulse control and can properly conceptualize a loan, it could be a useful tool. In my experience, however, these kinds of programs don't target responsible spenders. People are pretty bad at thinking about monthly cost in terms of total cost.

Totally agree that it's best for responsible people. But what is Apple's goal here — to increase the number of people/merchants using Apple Pay or hitting people with unexpected interest payments, which would sour them on the Apple brand? I would think that they're trying to grow their ecosystem, rather than make money while alienating customers. I could be wrong though — when times are tough, even good companies do lousy things.

I don't really think Apple's interest is in collecting interest on these payments, but I do think it will cause people to use Apple Pay more because it enables (perhaps encourages) them to buy things they otherwise wouldn't buy. That can be good or bad depending on the circumstances, I just expect this will be frequently utilized in an "impulse buy" sort of way because it creates an illusion of affordability.

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