Skip to content
Saved
Home › Guides › Loans & EMI
Loans & EMIहिंदी में पढ़ें

"Pay Later" and BNPL: it's a loan, and it shows on your credit report

5 min read
Hands holding a phone and a card while shopping online

Short answer: “Buy now, pay later” (BNPL) and “Pay Later” buttons are short-term loans from a bank or NBFC (a finance company that is not a bank). You usually get them through an app. Under RBI’s Digital Lending Directions, the app must name the lender and give you a Key Facts Statement. Your repayments must be reported to credit bureaus, so even one missed ₹500 can hurt your credit report. Small fees can add up to a high yearly cost. Use one provider at most, and know every due date.

The situation

Rahul uses “Pay Later” for food delivery, a train ticket and some clothes. Each one feels small. Then three bills fall due in the same week.

What’s behind the button

The money comes from a regulated lender, meaning a bank or NBFC that RBI supervises. The app is usually a lending service provider: it works for the lender and shows you the loan.

RBI rules give you some protection:

  • The lender (through the app) must tell you which lender you’re borrowing from and give you a KFS (Key Facts Statement, a short summary of the loan’s costs).
  • The money must go directly between you and the lender.
  • You get a cooling-off period of at least one day. In that time you can leave the loan without a penalty, if you repay the principal (the amount borrowed) plus the cost for the days you used it. The lender may keep a reasonable one-time processing fee, if the KFS says so.
  • Your limit can’t be raised unless you clearly ask for it.

Everything is reported to credit bureaus, including short-term “deferred payment” credit, where you pay for something later.

A ₹ example

Fictional. Calculated by Paisavy.

The fee. A “pay in 30 days” bill of ₹3,000 comes with a ₹60 convenience fee.

That’s ₹60 ÷ ₹3,000 = 2% a month. If you pay that every month, it comes to about 26.8% a year. That is more than many personal loans cost.

The pile-up. Three Pay Later bills fall due in the same week: ₹1,200 + ₹2,500 + ₹800 = ₹4,500. Rahul earns about ₹4,000 a week, so he’s ₹500 short. If he pays late, he gets late fees and a mark on his credit report.

Using Pay Later safely

  1. Use one provider at most. In your other apps, turn off “Pay Later” as the default way to pay.
  2. List every due date and match them to your payday.
  3. Find the lender in each app (look for “lending partner” or the KFS) and check that it’s regulated. (See How to check a lender or loan app.)
  4. Read the fees: convenience fees, late fees, and any interest after the free period.
  5. Pay in full and on time. If you can’t, contact the lender before the due date.

Credit line on UPI

Some banks now let you link a pre-approved credit line to UPI, the system you use to pay from your bank account by phone. They need your consent first. Then you can scan a QR code and pay with borrowed money. It’s easy to use, but it’s still a loan, with interest and a due date. It goes on your credit report like any other credit.

Myths

  • “Pay Later isn’t a loan.” It is a loan from a regulated lender, and it’s reported to credit bureaus.
  • “Small amounts don’t affect my CIBIL.” (CIBIL is one of the credit bureaus in India.) Every repayment is reported, so a missed ₹500 counts.
  • “If the app shuts down, I don’t have to pay.” You owe the lender named in your KFS, not the app.

What to check today

  1. Open each shopping or delivery app and see if Pay Later is switched on.
  2. Write down every Pay Later balance and due date in one place.
  3. Check your free credit report to see how these accounts appear.

Try it with your own numbers

→ Budget tool: add Pay Later bills under “Loan payments” and see what’s left.

Sources and review

Try it with your numbers
Monthly budget
Open tool →

Educational information, not financial advice. Found an error? Tell us → · Corrections log

Frequently asked questions

Is BNPL or Pay Later a loan?

Yes. "Buy now, pay later" (BNPL) and "Pay Later" buttons are short-term loans from a bank or NBFC (a finance company that is not a bank). The app usually works for the lender and shows you the loan. Under RBI's Digital Lending Directions, the app must name the lender. It must also give you a KFS (Key Facts Statement, a short summary of the loan's costs).

Does Pay Later affect my CIBIL score?

Yes. Pay Later repayments are reported to credit bureaus, including short-term "deferred payment" credit. CIBIL is one of the credit bureaus in India. So even one missed ₹500 bill can hurt your credit report. Since July 2026, lenders report to bureaus weekly, so changes show up fast. Check your free credit report to see how these accounts appear.

Are Pay Later convenience fees expensive?

They can be. A ₹60 fee on a ₹3,000 bill due in 30 days is 2% a month. If you pay that every month, it comes to about 26.8% a year. That is more than many personal loans cost. Read every fee in the app and the KFS: convenience fees, late fees, and any interest after the free period.

If the Pay Later app shuts down, do I still have to pay?

Yes. You owe the lender named in your KFS, not the app. The money comes from a regulated bank or NBFC, and the app only shows you the loan. Find the lender in each app under "lending partner" or in the KFS. Then check it's regulated, using How to check a lender or loan app.

Can I cancel a Pay Later loan after I take it?

Yes, during the cooling-off period of at least one day. In that time you can leave the loan without a penalty. You repay the principal (the amount borrowed) plus the cost for the days you used it. The lender may keep a reasonable one-time processing fee, if the KFS says so. Your limit also can't be raised unless you clearly ask for it.

What is a credit line on UPI, and is it a loan?

Yes, it's a loan. Some banks let you link a pre-approved credit line to UPI, the system you use to pay from your bank account by phone. They need your consent first. Then you can scan a QR code and pay with borrowed money, with interest and a due date. It goes on your credit report like any other credit. Track it in the Budget tool under loan payments.