NY Fed Confirms that BNPL is definitely favored by the “Financially Fragile”
But how are the loans performing? Affirm did great, but what of the others?
Household leverage is historically [????] for all income cohorts
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BNPL delinquent or not?
Fun for the financially fragile
Last week, Random Walk was pleasantly surprised to discover something remarkable: Affirm’s delinquency rates were going down.
By way of brief background, the set up is as follows:
if you wanted to be paranoid about stuff, then a “financial inclusion tool” designed to help people buy things they might not otherwise afford (using credit that doesn’t get reported to the credit bureaus) is a good place to start.
if you wanted to be optimistic about stuff, then a “financial inclusion tool” that offers quality loans where other lenders dare not go, is also a good place to start.
I mean, gahhh, look at this, it’s terrifying (via NY Fed):
“Financially fragile” consumers are a far larger share of BNPL users, especially repeat users, and they are far more likely to make a purchase “they do not have money for up front, or that they could otherwise not afford.”
Alert! Alert!
. . . or maybe that’s actually awesome?
Anyways, Affirm is just one BNPL company, but it fell squarely into Camp Optimism:
Affirm is definitely growing, and somewhat remarkably (to me), their delinquency rates are not only fine, they’re getting better:
While everyone else is seeing rising (aka “normalizing”) delinquencies, Affirm is flat-to-down.
It’s just one company and just one quarter, but that’s pretty encouraging news.
Just one company indeed.
The delinquency worm turns
Well, another BNPL company, Upstart, has since reported, and this time, score one for Camp Doom.
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