Imagine you want to buy a smartphone worth ₹40,000. You check your savings, but it’s not enough. Should you opt for a BNPL service or take an SBI personal loan? Let’s compare.
With BNPL, you can split the payment into four interest-free instalments of ₹10,000 each over two months.
If you take an SBI personal loan at 12% annual interest for six months, your monthly EMI would be approximately ₹6,881. That’s a total repayment of ₹41,286, including ₹1,286 as interest.
BNPL is growing rapidly in India. A report reveals the BNPL market is expected to hit $45-50 billion by 2026. But is it always better than traditional loans? Let’s dive deeper into their differences and determine when to choose what.
What is BNPL (Buy Now, Pay Later)?
BNPL allows you to shop now and pay for installments later. Platforms like ZestMoney and Simpl make this process quick and hassle-free. No lengthy approvals or credit checks.
Here’s an example. If you spend ₹20,000 on furniture, you might pay ₹5,000 upfront and the remaining in three monthly instalments of ₹5,000 each. No interest applies if you pay on time. It’s perfect for small expenses but risky if you overspend.
So, is BNPL the smarter choice? Not always. Platforms charge hefty penalties if you miss a payment, sometimes 30-36% annually. Compare that with SBI personal loans, which offer more structured repayment at a lower rate.
What Are Traditional Loans?
Traditional loans, like SBI personal loans, are designed for larger, planned expenses. They involve a credit check, documentation, and a fixed repayment schedule.
For example, if you borrow ₹1,00,000 from SBI at 10% interest for one year, your EMI would be ₹8,792. Over the year, you pay ₹5,504 as interest, totalling ₹1,05,504.
Traditional loans are better suited for higher amounts and long-term needs. They build your credit score, unlike BNPL services, which might not report to credit bureaus.
BNPL vs Traditional Loans: Key Differences
Here’s a quick comparison:
| Aspect | BNPL | SBI Personal Loan |
| Approval | Instant, no credit check | 2-3 days, requires credit check |
| Interest Rates | Often 0% (short term) | Starts from 9.6% annually |
| Repayment Tenure | Few weeks/months | 12-60 months |
| Usage | Small purchases | Larger planned expenses |
| Penalties | High late fees | Structured, transparent penalties |
When Should You Choose BNPL Over Traditional Loans?
BNPL works best for small, immediate expenses like gadgets, clothing, or groceries. Here’s why:
- Zero interest (if paid on time).
- Instant approval—ideal for urgent purchases.
- No impact on your credit score.
However, don’t overuse BNPL. Missing payments can lead to higher penalties. If your goal is to manage long-term finances, stick to an SBI personal loan instead.
When Should You Opt for a Traditional Loan Instead?
Traditional loans are ideal for big expenses like weddings, medical emergencies, or home renovations. Let’s see why:
- Higher loan amounts: You can borrow up to ₹20 lakh with an SBI personal loan.
- Longer tenure: Repay over 1-5 years.
- Fixed interest rates: Manageable and predictable monthly payments.
Pro Tip: Use a loan calculator before applying. For instance, a ₹5,00,000 loan at 9.6% interest over three years will cost you ₹16,048 per month.
Financial Health: Making the Right Choice
Always consider your needs. BNPL is great for small, urgent buys. But for higher amounts, traditional loans like SBI personal loans are reliable. They help you plan finances better and build your credit score.
For instance, if your expense is ₹1,50,000, BNPL isn’t practical. But an SBI personal loan at 10% interest over 24 months would cost you ₹6,911 per month. That’s affordable and structured.
Conclusion
Choosing between a BNPL and a traditional loan depends on your financial situation. BNPL works well for small, short-term needs. However, SBI personal loans offer better security and transparency for bigger, long-term goals. Always calculate repayment amounts before deciding.
It’s a reminder to use these services wisely. Which option suits your needs today?
FAQs
- Can I use SBI personal loans for medical emergencies?
Yes, they are ideal for unplanned expenses like medical bills. - Does BNPL affect my credit score?
Not usually, unless you default on payments. - What is the interest rate for SBI personal loans?
It starts from 9.6% annually and varies by eligibility. - Is BNPL good for big purchases?
No, it’s best for small expenses. Use a personal loan for bigger buys.