Buy now and pay later is dangerous for some people actually. Regulations coming…
I always tell people that even if we could buy a property using cash, we should still use a loan instead. The reason is so that we could use those cash we have for other investments versus just staying in it and thus earning nothing extra from it. People would tell me that if I take up loans, I will have to pay interest rate. Oh… the 4 percent ish interest rate? Truth is… just simply picking a typical REIT counter will already give us a higher return than the 4 percent interest rate we have to pay to the bank yeah.
How about buying some cheaper stuffs then?
Like some electronic gadgets? Say it’s RM1,200. Should we be tempted to take up the buy now pay later OVER 3 PAYMENTS? Thus, instead of being able to afford one item paying RM1,200 this month which is within our budget, maybe we could buy 3 other different items of RM1,200 instead? Although it is RM3,600 in total but since we are paying all these over three months, the payment this month is the same as when we buy one item; RM1,200 ONLY. Difference is… we have to pay RM1,200 over 3 months but we already ENJOYED 3 items this month! FOMO? YOLO? Well, the government does think that it could become a financially dangerous thing, so they will attempt to regulate this soon.
Article in nst.com.my. The Consumer Credit Act, which will among others regulate the ‘Buy Now Pay Later’ (BNPL) industry, will be tabled at the next parliamentary sitting.
Bank Negara Malaysia in a statement today said the passing of the Act will see the establishment of the Consumer Credit Commission (CCC) as the new authority regulating non-bank credit providers and credit service providers in Malaysia.
The CCC will regulate and supervise a range of entities currently not subject to any regulatory authority in Malaysia. This includes BNPL companies, non-bank factoring and leasing companies, impaired loan buyers, debt collection agencies, and debt counselling and management agencies.
According to the Khazanah Research Institute, BNPL service providers generated RM6.2 billion in sales last year. Do read the article here: Article in nst.com.my.
I think regulation is perfectly fine
If people should no longer be allowed to proceed with BNPL because they are already in deep financial trouble, then they should not be allowed lah. Just like applying for a home loan where the rejection rate can be quite high, BNPL is also not supposed to be for everyone. Of course, I have no idea how BNPL will be regulated but I think it will be along the lines of reducing the potential for financial crisis for that person who wants to take up BNPL but he / she already could not afford it.
What do you think? Regulate BNPL or just let it be… let it be…. let it be… let it be… ? (lyrics to a song)
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