People are taking out loans for their takeout meals

Have you ever craved a burrito or your favorite sushi roll so badly that you’ve considered taking out a bank loan to get your fix? A new program announced by DoorDash effectively allows consumers to do just that, and it has some experts concerned.

“This is going to have some sort of effect on the economy that I don’t know that we’re prepared for,” said Giacomo Santangelo, senior lecturer of economics at Fordham University, in a recent interview with Audacy’s KCBS Radio.

According to a March 20 press release, online food delivery service app DoorDash has partnered with Klarna – an artificial intelligence-powered payments and commerce network – to offer “flexible payment options” for its customers. It said that DoorDash users will have access to Klarna’s “seamless” range of payment options in the coming months for grocery, retail and more. Options will allow consumers to pay in full, to pay in four interest-free payments or to “pay later” at a more convenient time.

“I think this is yet another signal that the economy is not doing as well as we previously may have reported,” said Santangelo. “The fact that when you go to buy your breakfast, you’re taking out a bank loan is very worrisome to me and a worrisome signal for the general well-being of the economy.”

He explained that some of these payment options that offer later payment come with interest. Those interest payments will continue long after the takeout containers are in the trash.

“A month from now when you buy new groceries… you’re buying new groceries and making interest payments on groceries from a month ago – now you’re literally taking out a bank loan,” Santangelo said.

Audacy reported last month that Americans’ household debt had reached record highs. Mortgages, auto loans, student loans, and credit cards debt contributed to an estimated $18.04 trillion in debt. Santangelo said this new way to finance small purchases could add to this debt even more. He mentioned that, back during the 2008 financial crisis a subprime mortgage system that had people paying high interest rates because they had bad credit was part of the financial breakdown.

“Now you’re offering people to buy their groceries on credit, giving them bank loans… how do you default on this?” Santangelo said. He also said that efforts to dismantle the Consumer Financial Protection Bureau also add to concerns.