India’s Buy Now, Pay Later is anticipated to grow up to 13.4% by the end of 2025, reaching USD 21.95 bn. The personal loan is anticipated to reach 14.2% year-on-year, which is on downside compared to 2024. Both BNPL and Personal loan options are expanding, choosing the right one can make a lot of difference in terms of its interest, EMI commitments and the credit score of an individual. This guide will break down the fees, limit, approval speed and the associated risk so that you can make smart decisions to borrow in 2025.
What is Buy Now, Pay Later (BNPL)?
BNPL (Buy Now, Pay Later), is a short-term financing option. This allows the consumers to buy any product or service of their choice with the convenience to pay later at a zero to lesser interest rate over a fixed period of time. BNPL services are often used by consumers at the time of online shopping, food delivery platforms, travel bookings, utility bill payments and while availing subscription services for OTT platforms, wellness and courses offerings. How does it work?
- The consumer can choose the BNPL provider at the time of checkout.
- It works both online and offline stores.
- The customers are liable to repay it in a scheduled EMI ranging from 3 to 6 months of period.
- Most BNPL providers conduct a soft credit check or basic KYC to check the background of the customers to approve the credit instantly.
Key Players in India:
- ZestMoney – One of the earliest BNPL providers who offers zero-cost EMIs.
- LazyPay – This provider is known for their quick credit approvals and small-ticket purchases.
- Simpl – Focuses on the easy “One-Click-Checkout” and consolidated monthly bills features.
- Amazon Pay Later, Flipkart Pay Later & Paytm Postpaid – These are integrated BNPL service providers by majority of the e-commerce platforms.
What is a Personal Loan?
A personal loan is an unsecured loan that is lent by banks and/or non-banking financial institutions (NBFCs). Any individual can borrow money for a fixed tenure ranging usually between one year to five years repayable at fixed monthly EMIs. How does it work?
- Borrower seeks the bank or financial institution with income proof, and credit history.
- The lender approves the requested loan amount based on the credit score, income level and the debt-equity ratio of the borrower.
- The loan amount is dispersed at a lump sum repayable in a fixed monthly installments.
- The interest rate for the loan varies between 12-24% depending on the risk profile.
Major Providers in India: An individual often seeks for personal loans from banks or NBFCs majorly for medical emergencies, weddings and events, home renovation or travel, and debt consolidation.
- Banks: HDFC Bank, ICICI Bank, SBI, Axis Bank
- NBFCs: Bajaj Finserv, TATA Capital, MoneyTap, Indiabulls
Also read: Get Free Lounge Access, Cashback & More with These SBI Cards in 2025!
BNPL vs. Personal Loan: Head-to-Head Comparison
| Feature | BNPL | Personal Loan |
| Loan Amount | INR 500 – 1,00,000 | INR 50,000 – 50,00,000 |
| Repayment PEriod | Weeks to 6 months | 12 to 60 months |
| Interest/Fees | 0 to low interest (initially) | 10% to 24% interest |
| Approval Time | Instant/within minutes | 1-3 days |
| Credit Check | Often soft or none | Requires credit history |
| Impact on Credit Score | Low (some reports are optional) | High (reported to bureaus) |
When to Choose BNPL?
- BNPL is best for short term and small ticket purchases like gadgets, electronic items, clothing or for availing subscription services.
- This method is ideal for salaried millennials, students or first-time borrowers with limited credit history.
- Remember that late payments may attract higher interest, penalties and late fees.
- Be cautious to not overspend due to ease of use and lack of immediate repayment pressure.
- Also, frequent defaults may impact your credit score.
When to Choose a Personal Loan
- Best for long-term or planned big expenses like weddings or events, travel expenses, or for home renovations.
- Highly suitable for individuals with stable income and a good credit score. These loan’s approval depends on the financial credibility of an individual.
- Comes with a structured EMIs and higher loan amounts, making it a better fit for long-term financial commitments with fixed and scheduled repayments.
Key Considerations
- Self assess whether you can comfortably repay the loan amount within the given time frame. Because, missed payments can lead to heavier late fees, interest and charges.
- BNPL involves soft checks, but defaults still affect your credit history. Personal loan involves hard credit checks and regular reporting to credit bureaus.
- BNPL for small ticket, every day needs while personal loans are appropriate for big events and high-ticket transactions.
Conclusion
There is no one-size-fits-all solution especially in case of BNPL or personal loans. It varies based on each individual’s financial situation and needs. Make sure to decide based on your specific need, loan amount and your ability to repay on time. Both the options are financial tools, use them wisely to support your goals that do not strain your future.
Written by Kavitha Sugumar
