DENVER (KDVR) — It’s a magical time of year, and extra money can make holiday dreams come true. But the holiday season is also a time to look before you leap when it comes to borrowing money.

CoPIRG issued a consumer alert warning shoppers to be aware of debt traps, which can include “buy now pay later” offers.

“Essentially, it’s a layaway plan matched together with a credit card that has some pretty high interest rates and fees,” CoPIRG executive director Danny Katz explained.

Katz added that it is important to consider the cost of interest.

“They’re offering ‘buy now pay later’ programs for something that costs as little as $30, and so you’re basically paying $7.50 a week,” he said.

Supervised loans can involve between $2,000-$8,000 with a 2-4 year payoff range.

Be cautious: Interest fees can leave you in the hole

The Center For Responsible Lending conducted a review of 67 court cases involving loan defaults. Many customers fall victim to upselling and add-on features that drastically increase the cost of the loan.

“Even though these APRs are between 21-36%, when you actually look at the products, extra insurances and car club memberships that these lenders have sold borrowers, they ended up paying back much more,” Whitney Barkley-Denny told FOX31.

In some cases, customers can end up paying as much as $4,000 in interest fees on a $5,000 loan.

CoPIRG recommends that consumers always read the fine print on any loan agreement. Make sure you understand exactly how much interest is calculated and how the payback term affects how much you’ll pay.

Katz warns the same federal protections may not be in place for “buy now pay later” deals. Refunds may be more difficult and other problems may arise. Make sure to ask before you sign.