A partnership between the financial services company Klarna and food delivery service DoorDash will allow customers to pay for food or grocery delivery using a “Pay in 4” model, also known as buy now, pay later.

Buy now, pay later has emerged as a wildly popular way to pay by splitting purchases into smaller payments.

It can help in times of financial hardship — but is it always a good option?

Student Ellie Cochran is among the college-age shoppers who love to spread out payments with buy now, pay later plans.

In her case, for the big horse race, “I bought it for my Kentucky Derby ticket,” she told us.

Most plans allow customers to make four equal and often interest-free installments rather than pay the price in full.

“A lot of people might not have all the money at one time, and it's nice to not see a big chunk of money come out of your bank account,” said student Lauren Kent.

Watch as buy now pay later users explain whether they think it is a smart idea:

Potential downsides to buy now, pay later

In a recent survey, the personal finance company NerdWallet found more than half of Americans, 55%, have used buy now, pay later services.

Of those who have used buy now, pay later in the past year:

• 16% regretted a buy now, pay later loan
  
• 19% carried multiple loans at the same time
  
• 19% paid late fees or interest

“It's important to remember that it is a form of borrowing,” said NerdWallet credit cards expert Sara Rathner. “If you're unable to make payments on time, until you've paid off that purchase in full, there are going to be financial consequences.”

Rathner reminds consumers that missed payments can affect your credit score.

More flexibility

When used responsibly, smart shopping expert Trae Bodge believes buy now, pay later can be a helpful stopgap.

“It is a great way to spread out purchases across multiple pay periods or multiple months so it can give you some wiggle room in your budget,” Bodge said.

While some may associate DoorDash with late-night food orders, the service is also used for grocery orders by families who may not have immediate access or transportation to nearby grocery stores.

“Our partnership with DoorDash marks an important milestone in Klarna’s expansion into everyday spending categories,” wrote David Sykes, chief commercial officer of Klarna, in an online news release. “By offering smarter, more flexible payment solutions for groceries, takeout, and retail essentials, we’re making convenience even more accessible for millions of Americans.”

Rathner and Bodge both caution against overusing buy now, pay later, especially for smaller purchases, like low-cost fast food.

“I really feel that buy now, pay later should be reserved for those bigger purchases,” Bodge explained. “As long as you are very clear about the rules and what the expected payment schedule is.”

NerdWallet suggests asking these questions to avoid buy now, pay later regret:

• Is your purchase necessary?
  
• Does the plan charge interest?
  
• Can you cover the payments plus other expenses?

Student Shannon Jordan has friends who buy now and pay later, but she’s hesitant.

“I personally do not think it's a good idea,” she said, “because if you don't have the money then, then nine times out of ten, you won't have it later either.”

Good advice so you don't waste your money.

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