CFPB Report on Financial Profiles of Buy Now, Pay Later Borrowers 

By Kathleen Pierce, NPA GRC Liaison 

March 9, 2023 


On March 2, 2023, The CFPB released a report on customers that use Buy Now, Pay Later products and their overall financial profile.  Their report found that most consumers of BNPL products are also users of high-interest products.    

The report found that many BNPL users have sub-prime or below sub-prime credit scores.  Pawn is categorized as an “alternative high-interest financial service”, along with payday and auto title loans. The CFPB report mentions pawn several times.   

An interesting note is why and when pawn customers use the BNPL product.  The study asks consumers how often they used certain products in the past twelve months and included the following products for consumers to rank. Consumers mentioned overdrafts, payday loans, auto title loans, other types of “alternative financial services,” revolving credit card debt, and pawn transactions.   

Pawn is ranked 5th out of the above 6 products mentioned. Consumers reported using revolving credit card transactions the most. Consumers ranked overdraft protection products second. Looking only at pawn consumers, 8.6 percent used BNPL products, and 1.6% pawn customers did not use BNPL products.   

The 2023 study refers to another CFPB study published in May 2021, entitled “Consumer use of payday, auto title, and pawn loans.”  The study shows that pawns were the least frequently used product for consumers and payday and auto title options were more frequently used.  The CFPB noted that pawns dropped significantly from 73% to 34% during the pandemic.  Any pawnbroker who was working during the pandemic already knew that.  Our customers picked up their items and stayed home.    

The CFPB will continue to research the above products available to consumers.  As pawn transactions are mentioned more often, the CFPB acknowledged the need for immediate access to cash that only a few consumer financial services providers can offer at this time. Pawn is still the only option for consumers that is non-recourse and with no obligation to redeem. Pawn apparently qualifies as a no debt option for consumers of all credit ratings.