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Traveler is going through dollar bill blocks, with cursors floating.
Lixia Guo / Money; Getty Images

After a year of being cooped up, folks are booking post-pandemic travel again. A fast-growing crop of apps aims to help you book your trip now and pay later, but should you take advantage?

Third-party financing companies are everywhere you can make big-ticket purchases these days. As interest in post-pandemic travel ramps up, these online financing companies are expanding their partnerships with airlines and other vacation companies. This spring, for example, Vrbo announced you can book a vacation on its site and pay for it later using Affirm, a company that offers installment payment plans.

This may make booking vacations more affordable and accessible, but it could also lead to dangerous spending beyond what you can feasibly pay back. Some 57% of online consumers polled in a recent study told C+R Research they overspent when they used a buy now, pay later program, and they now regret it. When booking vacations further out, it could be tempting to spend money you don’t yet have. But you need to understand what you're getting into if you opt to book with a financing app.

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Here’s how they work

These companies aren't informally offering to stretch your payments out — they're actually offering personal loans, where you’ll pay a fixed interest rate over installments. They're different from credit cards, which have variable interest rates and charge late fees. And they're different from banks, in that they're not lenders themselves but instead connect users to loans from banks. (You can find a list of the lenders these companies use to issue loans on their websites.)

Depending on which payment app you use — they all work slightly differently, as Money has reported — payments will get split up between as little as a few weeks to as long as a few years, according to your preference. You’ll be assigned an interest rate of about 0% to 30% APR, based on data including your credit score. Rates are presented before you commit to the loan.

Instead of paying the company you’re making a purchase from directly, you’ll see a monthly charge from the app on your checking account.