Is a point-of-sale loan right for you? Expert offers advice on when to consider it

NEW YORK -- With prices on the rise and shoppers feeling the squeeze, it can be tempting to turn to "buy now, pay later" options at stores.

Growing in popularity are point-of-sale loans, where third-party lenders get in the sale and customers get to take items home before fully paying for them.

No credit is needed with flexible payments, helping move merchandise by making it easier to buy.

"I have done it with furniture and a chair set," shopper Renee Green said.

Green relied on advice from sales associate Irma Payamo at an East Harlem department store, setting up a payment plan for new furnishings.

Called a point-of-sale loan, it lets her break down the purchase into a series of smaller payments.

"She just put $50, and she's gonna do the payments every month," Payamo explained. "You can do the payments slowly. A lot of people are actually doing it."

Point-of-sale financing is rapidly expanding in the United States as lenders partner with major retailers.

"They actually do a credit check," Payamo said.

"That's going to be what's called a soft credit check pull, that's not going to impact your credit score at all," said Kristin Myers, editor-in-chief of the personal finance website The Balance. "This is one of those ways that you can really purchase especially a big ticket item with perhaps a lower interest rate than you would get from your bank or on a credit card."

She says consider using one of these loans on a big, one-time purchase, when the offer is zero or minimal interest and when the installments comfortably fit your budget.

Myers adds always pay on time to avoid late fees.

"The problem is if you can't afford that item, you really should consider whether you want to take on that debt," she said.

Myers says when it comes to returning merchandise, that's where this can become tricky.

"You really want to make sure you're going to keep it because getting a refund becomes complicated when you haven't fully paid for the item," she said.

It could mean having to negotiate a return or exchange with both the lender and the retailer.

Myers says with any purchase, ask yourself, is it a want or a need?

With a need, you might get creative with financing. If it's a want, save up for when you can pay full price.

Experts say it's important to doublecheck the interest rate before you commit. Some can go up as high as 30%.