What does "pay later" really cost you?
Your ₹62,000 salary lands at night, and by morning rent, a card bill, a laptop EMI, three pay-later apps and a personal loan have taken almost all of it. That is how Ankur Warikoo opens Why is GenZ Taking LOANS?! Financial Nihilism Part 2. This calculator shows the true yearly cost of any pay-later plan, once fees, GST and hidden interest are counted.
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₹62,000 at night, almost nothing by morning
The video opens on the 2nd of the month. The salary arrives at 9 pm, and by morning these deductions have gone through:
Not one meal has been bought yet. None of these felt like loans when they were taken: no banker, no paperwork, just a tap at checkout.
Figures cited in the video:
The video adds that 45% of new credit card holders are under 30, that card NPAs have risen to nearly ₹6,700 crore, and that in one Amazon Great Indian Festival sale, one in four phones was bought on a loan, four in five of those on no-cost EMI.
Paid in full, a card is an interest-free loan for a month that builds your credit history and earns rewards. Miss the full payment and the rate jumps to 36% to 48% a year. Pay only the minimum due on ₹1 lakh and, by Monzy's calculation at 3.5% a month, it takes about 19 years to clear, and about 28 once 18% GST on the charges is added.
Pay-later apps are unsecured loans funded by NBFCs, and every one is reported to the credit bureaus, even a ₹499 biryani. Because the amounts are small and the checkout takes seconds, it is easy to forget how many are running.
Banks lend to salaried people at roughly 12% to 15%. Instant loan apps lend small amounts in a click at 18% to 36% or more, and unregistered apps can turn to threats and harassment to recover dues. Borrowing from one app to repay another is how the trap closes.
The video puts the cost of a ₹1 lakh no-cost EMI at about ₹1,700 to ₹2,000. Monzy's calculation for 12 months at a 15% lender rate comes to about ₹1,600 before any broken-period interest or lost cashback.
Is no-cost EMI really free?
Not quite. The seller pays the interest to the lender as a discount, but you still pay 18% GST on that interest, a processing fee of around ₹199 plus GST, and sometimes interest for the days before your first EMI. You may also lose reward points or cashback you would get by paying in full. The video puts a ₹1 lakh no-cost EMI at about ₹1,700 to ₹2,000 in extra costs.
What is the real interest rate on buy now pay later in India?
Paying a pay-later bill in full by the due date usually costs nothing. Converting it into EMIs, or borrowing from instant loan apps, typically costs 18% to 36% a year or more, according to the video. Fees make short loans much costlier than the quoted rate. A ₹10,000 loan for three months at 30% with a 3% fee cut from the payout works out to about 67% a year once compounding and the fee are counted.
What is APR, and how is it different from the interest rate?
APR, or Annual Percentage Rate, is the yearly cost of a loan including interest and every fee. The interest rate covers only the interest. Since 1 October 2024, RBI has required lenders to show the APR in a Key Fact Statement for retail loans. Credit card dues are excluded, so card EMIs and minimum dues need to be checked separately.
Does buy now pay later affect my CIBIL score?
Yes. Pay-later purchases are loans from NBFCs, and they are reported to the credit bureaus like any other loan. Paying on time helps build your history, while missed payments drag the score down and stay on your report for years. A lower score can mean a higher rate on a future home loan, and some employers check credit reports while hiring.
How long does it take to clear a credit card bill by paying only the minimum due?
Much longer than most people expect. At 3.5% a month, with the minimum set at 5% of the balance, a ₹1 lakh balance takes about 19 years to clear by Monzy's calculation. Add 18% GST on the finance charges and it stretches to about 28 years, with more in charges than the original spend. Paying the full bill, or moving the balance to a cheaper loan, cuts this sharply.
How does this BNPL true cost calculator work?
It lays out every rupee you receive and pay, including the EMIs, GST on interest, processing fees and any cashback you give up. It then finds the monthly rate that makes those payments equal to what you received, and compounds it over 12 months to give the true yearly cost. For credit card minimum dues, it simulates the balance month by month until it is cleared.