Known for its big-name headlines, bohemian style and celebrity witnesses, the Coachella Valley Music and Arts Festival has long been one of the most popular music events in the United States, but attending Indio, California-based Indio events also carry a high price tag – an expensive tag – a three-day pass costs $599. According to Billboard, more than half of Coachella’s 160,000 to 200,000 participants this year mitigated some tag vibrations by choosing payment plan options.
For Coachella or other festivals, Lollapalooza and Rolling loudly say payment plans are nothing new. Coachella began offering the option in 2009, when about 18% of attendees chose it. However, over the next few years, the Buy Now, Pay Again (BNPL) program has become increasingly ubiquitous. Today, about 60% of Coachella participants choose such payment methods.
Coachella did not respond to a request for comment.
The payment plan for the festival is not exactly the same as that offered by famous BNPL providers such as Klarna and Adkernecter (AFRM), which sometimes charges interest to those who fail to pay on time. According to Billboard, the festival’s system requires an additional $41 fixed fee to cancel orders, if a scheduled payment is missed, and a credit line that can be used for next year’s edition will be issued.
But experts say this plan still has no risks. “The problem is that more flexibility also provides more overspending opportunities,” UCLA economics professor Wesley Yin told Observer. He added: “It really requires a lot of personal awareness of finances and spending, which is always easy for a typical consumer right now.”
The BNPL program is very popular
Unlike traditional credit card companies, BNPL providers do not always require credit checks, so it is easier to access for consumers who may already be in financial vulnerability. Those who choose BNPL plans have disproportionately lower credit scores, according to a survey by the Federal Reserve Bank of New York.
This has not stopped the surge in the BNPL industry in recent years. Nearly $34 billion in loans originated in 2022, rising from $24 billion in 2021 and even from $2 billion in 2019, according to the Consumer Financial Protection Bureau.
These programs are found throughout the consumer sector and can now be applied to seemingly mundane purchases of burritos. Klarna, for example, last month worked with food delivery service Doordash (DASH), and was used by companies such as Walmart (WMT) and Instacart (shopping cart).
Sean Pyles, host of Nerdwallet Smart money Podcast, tell the observer.
When it comes to purchasing systems around events like music festivals, Pyles fears that these plans will lead to “stacked” loans. Between accommodation, food and even holiday clothing, the total cost of attending Coachella adds up much more than the price of the ticket. “It can be difficult to track multiple loans at once, especially if you have them with different providers,” Pyles said.
Pyles said that while BNPL plans are not an inherent financial choice, short-term purchases that rely on them to add up are when risks start to emerge, noting that the “wider trend” of consumers relying on new financial products is “just enjoy the moment, enjoy the moment, go out and probably be happy and what it might mean for their finances.”
