A Newark assemblyman wants New Jersey to crack down on buy now, pay later loans before more shoppers end up buried in fees they never saw coming. Assemblyman Chigozie U. Onyema has introduced Bill A5664, dubbed the Buy Now, Pay Later Act, to impose licensing requirements, fee and interest limits, and new disclosure rules on an industry that has quietly become a go-to option for covering everyday bills.
Buy now, pay later loans let consumers split purchases into installments spread over several weeks or months, often with no interest charged at all, making them a popular alternative to credit cards. But as New Jersey Globe reports, that convenience can turn into a trap: borrowers who fall behind can face steep fees, and the industry's leading providers include Klarna, Affirm, Afterpay, PayPal, Sezzle and Zip. Onyema's bill would require those lenders to be licensed by the state, follow responsible lending standards, disclose loan terms more clearly, and set up fair procedures for resolving customer disputes.
A Lawmaker's Case for Intervention
Onyema, who represents Newark in the Assembly, said the loans often start as a convenience but end up costing borrowers much more than they bargained for. “Buy now, pay later loans offer short-term flexibility and convenience, but for too many, they create long-term financial risks,” he said, according to New Jersey Globe's reporting. He added that “people turn to these loans to afford groceries, rent, gas, and utilities, only to find themselves trapped in a cycle of debt and junk fees,” per the outlet's account of his comments.
Onyema framed the bill as part of a broader affordability fight, arguing that families increasingly can't keep up. “This is the other edge of the affordability crisis,” he said. “On one hand, we can’t afford what we need. On the other, we’re drowning in debt just to keep our heads above water.” He also pushed back on the idea that New Jersey should simply wait for Washington to act, saying, “New Jersey should not wait for the federal government to impose tougher restrictions on the industry,” and that “states must step in to regulate an industry whose business model practically depends on missed payments and mounting fees.” He added that “companies profiting from financial desperation should be held accountable.”
This isn't Onyema's first swing at consumer protection. He previously sponsored the Fair Price Protection Act, which banned grocery stores from charging customers different prices based on personal information gathered through surveillance pricing.
What the Data Shows About BNPL's Reach
The scale of buy now, pay later borrowing has grown fast nationally. BNPL providers originated nearly $157 billion in consumer credit products in 2025, up from nearly $116 billion the year before, according to CNBC. Most of those loans still follow the no-interest “pay in 4” structure — an initial payment followed by three equal installments spread over six weeks — but interest-bearing installment loans made up more than 37% of annual BNPL issuance in 2026, nearly double their share back in 2021, the outlet reported.
The fees can add up quickly for anyone who slips. Late payment charges on some BNPL services run $7 to $8 per missed payment, while interest and financing fees can climb as high as 36%, per the same CNBC report. A March LendingTree survey cited by the outlet found that 29% of BNPL users had tapped the loans to buy groceries, 18% for car repairs or maintenance, and 13% just to pay rent.
Consumer advocacy organization Protect Borrowers says the pattern is becoming more entrenched: nearly half of Americans have used buy now, pay later financing, and nearly half of those borrowers missed a payment in the past year. The group also reports that women and people of color are more likely to use the loans. Separately, Protect Borrowers found that BNPL users tapped the products not just for groceries but for medical or dental care, other debt, utility bills and gasoline, according to the organization's research.
Open Questions Around the Bill's Path Forward
The bill stands as Onyema's attempt to get ahead of an industry that regulators have eyed warily before: the Consumer Financial Protection Bureau said in 2022 it planned to scrutinize BNPL companies like Klarna and Affirm over concerns their fast-growing products were harming consumers, according to Reuters. Whether New Jersey moves faster than Washington on the issue remains to be seen.
