Walmart and other noteworthy retailers have started a new offering this holiday season to entice shoppers into spending more: point-of-sale loans (POSL). If you have gone shopping recently for gifts and goodies, then you have probably seen signs around stores talking about POSLs. Walmart, for example, has partnered with a financial technology (fintech) company called Affirm to create its POSL program, so you might have seen Affirm ads there.
Should you take a point-of-sale loan? Or, are they just another serious debt risk that will end up putting you on a list in front of a debt collection agency?
What You Need to Know About POSLs
To be clear, a point-of-sale loan is a form of a loan, even if it doesn’t come with late fees or interest, as many POSLs do not. If you fail to pay a loan in its entirety, then your credit score will take a hit, which is always undesirable. But what might be even more frustrating is how failure to pay a POSL could prompt the original lender to turn to a debt collection agency.
Point-of-sale loans are mostly unsecured loans that are not backed by any national bank. To this end, debt you owe to a POSL lender might be dischargeable through bankruptcy. Up until that point, though, the lender will likely be all the more adamant about making sure you pay off the debt since it could be discharged eventually.
You should also know that point-of-sale loans are not guaranteed to be interest-free. Depending on your own credit score and what you buy, you could incur an interest rate when you accept a POSL, even if someone else gets the same loan with no interest. Beware that you could end up enjoying a product now but pay more than its original sale value later as interest adds up.
Lastly, point-of-sale loans might be rapid to get, but they do check your credit score. Some lenders only ask a consumer five quick questions at the checkout stand before approving their loan. Yet the minute it takes for the cashier to plug the data into their computer is all it takes for that lender to look at the applicant’s credit score. If you don’t want anyone looking at your credit score and possibly lowering it due to an unfavorable check, then you might not want to use a POSL at all.
(You can learn more about point-of-sale loans and the debt risk they can create by clicking here and viewing a full article from DeseretNews.)
Protecting You from POSL Lender Harassment
The fact that point-of-sale loans can lead to consumer debt and eventual creditor harassment is enough to give our team at Atlas Consumer Law in Chicago pause. It is always best to carefully consider a loan and all that could follow it if you struggle with your payments, and POSLs are no exception.
In case you do accept a POSL, fall back on your payments, and end up being harassed by a debt collection agency, come to us first for legal protection and guidance. Our attorneys have years of experience defending consumers from creditors, keeping creditors in check, and also suing creditors for Fair Debt Collection Practices Act (FDCPA) violations. A successful lawsuit against the creditor hounding you for a POSL payment could end with them paying you instead!
Call us at (312) 313-1613 to learn more about our legal services and your rights as a consumer in debt.