Both Buy Now, Pay Later (BNPL) and personal loans are popular credit options — but they serve very different purposes. While BNPL is often used for short-term, small-ticket purchases, personal loans are better suited for larger, planned or emergency expenses.
In this blog, we’ll break down the differences between BNPL and personal loans, compare costs, repayment flexibility, impact on credit scores, and more. If you’re unsure which one suits your financial needs better, this guide will help you make an informed decision.
What is Buy Now, Pay Later (BNPL)?
BNPL is a short-term financing option that lets you split the cost of a purchase into smaller, interest-free payments. You’ll often find BNPL options while shopping online for electronics, clothing, or travel bookings.
- Most BNPL providers offer repayment in 3-6 instalments
- Often available at checkout with minimal or no documentation
- Usually interest-free if paid on time
BNPL is ideal for small purchases you can repay within a few weeks or months.
Learn more about No Cost EMI and how it works to understand how interest-free schemes compare.
What is a Personal Loan?
A personal loan is an unsecured loan that gives you a lump sum amount which you repay in monthly instalments (EMIs) over 6 months to 5 years.
- Suitable for larger needs: weddings, home repairs, education, or debt consolidation
- Comes with fixed or reducing interest rates
- Requires a credit check and minimal documentation
Explore the benefits of personal loans to see how they can support your long-term goals.
BNPL vs Personal Loan: Key Differences
| Factor | BNPL | Personal Loan |
|---|---|---|
| Purpose | Small, instant purchases | Medium-to-large expenses |
| Loan Amount | ₹1,000 to ₹50,000 (approx.) | ₹5,000 to ₹20+ lakhs |
| Repayment Tenure | 15 days to 6 months | 6 months to 5 years |
| Interest | Usually 0% (short term) | 10% to 24% p.a. |
| Documentation | Minimal or none | PAN, Aadhaar, salary slips, bank statements |
| Credit Check | Often not required | Mandatory |
| Impact on Credit Score | May not report to credit bureaus | Reported monthly |
| Availability | At checkout on select platforms | Via loan apps or banks |
Which One is Cheaper?
BNPL seems cheaper because it often comes with 0% interest for short durations. But missing a payment can lead to: – Late fees – Interest on overdue amount – Account suspension
Personal loans come with fixed interest and clear repayment schedules. You always know what you owe and when.
If you plan to repay over 6+ months or borrow more than ₹5000, a personal loan is more predictable and safer long term.
Which is Easier to Get?
BNPL is extremely easy to access: – Available instantly at checkout – No need to submit documents or undergo credit checks
Personal loans take more effort: – Requires income verification, credit checks – Approval time can vary from a few hours to 1-2 days
That said, once you’re approved for a personal loan, the amount is credited directly to your account and can be used for anything — not just one purchase.
Impact on Your Credit Score
BNPL:
Some providers don’t report repayment to credit bureaus. So, paying on time may not improve your credit score. However, defaults can impact your credit file.
Personal Loans:
Always reported. Timely repayments can help build your credit profile. But missed payments will lower your score.
If you’re building or improving your credit, personal loans are the better option.
Learn how to improve your credit score for faster loan approval.
Repayment Flexibility & Tenure
BNPL: – Tenure usually fixed (3 to 6 EMIs) – No prepayment options – Less flexibility on due dates
Personal Loans: – Flexible tenure from 6 months to 60 months – Can repay early (may include prepayment charges) – EMIs can be auto-debited on chosen date
If you need repayment flexibility or want to reduce EMI burden, personal loans offer more control.
When Should You Choose BNPL?
Go for BNPL if: – You’re making a small-ticket purchase (< ₹5000) – The merchant offers 0% interest – You can repay in 1-3 months easily – You don’t want to go through a loan approval process
BNPL works well for: – Gadgets – Fashion & lifestyle – Short trips – Booking tickets
When Should You Choose a Personal Loan?
Choose a personal loan if: – You need ₹5000 or more – Your repayment timeline is longer than 6 months – You want to improve your credit profile – You need funds for multiple or urgent purposes
Personal loans are ideal for: – Medical emergencies – Home repairs – Higher education – Weddings or relocation
You can even opt for an Advance Salary Loan if you need funds before payday.
Choose Based on Need, Not Just Convenience
BNPL is great for quick, small payments without documentation. But it doesn’t offer flexibility or credit-building benefits.
Personal loans, though slightly harder to get, offer larger amounts, longer tenures, and financial discipline.
Make your choice based on: – Loan amount you need – Repayment capacity – Credit goals – Long-term affordability
Looking for a trusted personal loan provider?
LoanTap offers personal loans from ₹5000 up to ₹10,00,000 with flexible tenures, minimal documentation, and fast disbursals.
Apply online in minutes and get access to funds tailored to your needs.
FAQs
Q1. Is BNPL a loan?
Yes, BNPL is a form of short-term credit that lets you defer payments. However, it usually doesn’t require formal loan documentation or credit checks.
Q2. Does BNPL affect your credit score?
Only if the provider reports it. Many BNPL services do not report positive repayment history but may report defaults.
Q3. Are personal loans better for long-term borrowing?
Yes. Personal loans come with fixed tenures and EMIs, making them more suitable for long-term financial planning.
Q4. Can I prepay a BNPL plan?
Most BNPL providers don’t allow early closure or prepayment. You must stick to the EMI schedule.
Q5. Is LoanTap a BNPL provider?
No. LoanTap provides personal loans, including products like Advance Salary Loans, EMI-free loans, and more — not BNPL services.
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