According to behavioural science research (see Dan Ariely’s article “why don’t people manage debt better” here) when the debt is not coming from a bank loan, people seem to easily convince themselves that it is not, in fact, debt. “Buy now pay later” delays the pain of facing the payment. A cognitive bias leads us to underestimate the future pain of paying what we owe. And vendor financing does not come with a repayment schedule (like a bank loan) so it’s easier for people to fool themselves.
A study by Féidhlim McGowan, a PhD candidate at Trinity College in Dublin (see the study here) shows people also tend to make inaccurate judgments about long-term costs by, for example, underestimating the accumulations of costs and end up paying more for a product over time than it would cost up front. As an example, two phone options -- a) a “free" phone with services (i.e. calls, texts, data) for €50 per month for two years (total cost €1,200), or b) pay €500 f or the phone now and €20 per month for two years of services (total cost €980) are compared.