Buy now, pay later services have taken the place of layaway: You get to take home your purchase now and pay for it over time.
Affirm is one of the most common buy now, pay later services. But how does Affirm compare to similar services, and should you consider using it for your next big purchase?
This review will examine what financial services Affirm provides to its borrowers and how you can get started. We’ll also answer common questions about Affirm and address how it may affect your credit report.
What Is Affirm?
Affirm is a buy now, pay later service that enables consumers to split large purchases into multiple payments. Whether you want to shop online or in store, Affirm can generate a virtual credit card for you to use at checkout.
When selecting a method of payback, shoppers can choose between short-term interest-free payments or more dispersed monthly payments. Picking interest-free payments will spread your purchase over four payments every two weeks.
Founded in 2012, Affirm is a financial technology company headquartered in San Francisco. Over the past decade, Affirm has built up trust within the industry, and we have no trouble recommending it based on reputation alone.
How Does Affirm Work?
Shopping with Affirm is relatively simple, and you can begin one of two ways. The first method is to visit a store that offers Affirm payments and select the option at checkout. Our preferred method is downloading the Affirm app for Apple iOS or Android devices.
Downloading the Affirm App
You can view your preapproval amount by downloading the free Affirm app. The app also allows purchasers to view limited-time deals that you can combine with Affirm financing.
Once you create an account and are set up with the Affirm app, you can view your approved spending amount and begin shopping. At the top of the app’s home screen, you’ll see the options Shop in the app or Get a virtual card.
You can also tap the Shop button in the menu bar at the bottom of the screen to see any promotional deals available with Affirm financing.
Shopping With Affirm
Our favorite method of shopping with Affirm is to use the Get a virtual card option. Affirm will provide you with a one-time-use virtual credit card for your purchase using this selection. You can use the card online or in store using Apple Pay or Google Pay.
You’ll begin by entering the total checkout amount, making sure to include tax and shipping. If needed, you can round up to the nearest dollar. Any unused funds are returned to your account, so you won’t lose out on those pennies.
Once you’ve entered an amount, Affirm will prompt you to select a payment plan. In our testing, we chose to finance $500 and were provided multiple repayment options. We could repay over six weeks with 0% APR or over either six or 12 months (monthly payments) with 15.99% APR. No down payment is required.
It is important to note that your offers may not be the same as ours. While six-week repayment plans are always offered with zero interest rates, monthly plans will include a percentage of interest. Your offered interest rates (APR) will vary based on personal financial factors.
Once you have selected a repayment plan and payment dates, you must agree to the terms and conditions before receiving your virtual card. If you plan to shop online, use the virtual numbers and enter them at checkout.
Otherwise, you can select the option to add your virtual credit card to your mobile device’s virtual wallet. This will allow you to Tap to Pay with Apple Pay or Google Pay at any retailer with a supported wireless payment terminal.
Managing Your Affirm Purchases
Once you have paid for your purchase, your Affirm loan will show up under the Manage tab in the app. Here, you can view the total amount of the loan and the amount paid to date. You can also make additional payments to pay off the loan faster.
By default, Affirm will AutoPay your loans with a provided credit or debit card. If you wish to turn off the automatic payment option, you can do so within your loan options. Additional details provided here also include your interest rate, virtual card number and loan terms.
Alternatives to Affirm
If an Affirm loan doesn’t sound like the right option for your purchases, or you’ve already checked it out and don’t like what is offered, other options are available. From other buy now, pay later services to traditional personal loans, there are several alternatives.
Other Buy Now, Pay Later Services
Affirm is a popular option for splitting purchases into multiple payments, but it isn’t the only buy now, pay later service. Others are Afterpay, Zip (formally Quadpay), Klarna, PayPal and Sezzle.
Here is a comparison between three popular buy now, pay later services, showcasing interest rates, late fees and payment schedules.
Buy Now, Pay Later Services Comparison
| Features | Affirm | Klarna | Afterpay |
|---|---|---|---|
| Payment schedule | Affirm Pay in 4 (every 2 wks) or Monthly Financing | Pay in 4, Pay in 30 Days & Monthly Financing | First of 4 payments immediately, then every 2 wks |
| Interest rates | 0% on Affirm Pay in 4; 0%-30% on Monthly | 0% for Pay in 4 and Pay in 30 Days; 0%-25% Monthly | 0% interest |
| Late fees | No late fees | Up to $7 on Pay in 4; up to $35 on Monthly | $10, followed by $7 if payment isn’t made |
| Credit score effect | Soft credit check; may report history to Experian | Soft credit check for Pay in 4 and Pay in 30 | No credit check |
| Where it’s accepted | Everywhere online & in-store w/ wireless pay | Everywhere online & select in-store retailers | Select online & in-store retailers |
Additional Affirm Alternatives
If a buy now, pay later service isn’t the right choice, you may want to consider more traditional personal loans. Selecting personal loans will enable you to borrow money and pay it back while growing your credit with all three credit bureaus.
If you are seeking personal loans, we recommend checking out our best personal loan guide for assistance. If loans are new to you, we also recommend reading our step-by-step guide.
Selecting a zero interest credit card is another option when making a large purchase. Check out The Penny Hoarder Academy: Credit Cards 101 to learn more about the basics. Credit cards can be helpful or devastating, depending on how you use them.
The Pros and Cons of Affirm
Pros
- No-interest loans are available for shoppers looking to repay their purchases with biweekly payments.
- Affirm has no hidden fees, and no late fees are imposed if you are behind on your payments.
- You can purchase nearly anywhere with Affirm thanks to its virtual credit card, which can be added to your mobile wallet.
- No down payment is required for your Affirm loan.
Cons
- Only specific Affirm loans are reported to Experian, and none are reported to TransUnion or Equifax.
- There is no option at this time to reschedule your payments if needed.
- Interest rates are subject to change based on the individual borrower’s creditworthiness, with APRs up to 30%.
Frequently Asked Questions (FAQs)
The research for our Affirm review found that the service may affect your credit score. Affirm does not report to credit bureaus if your loan is 0% and four biweekly payments or if you were offered only one option of a three-month payment term with 0%.
Affirm may report loan payment history to Experian. Additional details Affirm may report to Experian include how much credit you’ve used, how long you’ve had credit, and any late payments. Creating an Affirm account or seeing if you prequalify will not affect your credit history or credit score.
As with any system in which you borrow money, Affirm is only a good idea if you are financially stable enough to afford all due payments on time. Zero-APR loans are the best choice when selecting an Affirm repayment plan, as you won’t owe additional interest.
Affirm may not be the best option for those who wish to grow credit as it isn’t consistent in reporting to credit bureaus. When Affirm does report, it reports only to Experian.
Affirm does not specify a minimum credit score for its applicants. But Affirm will consider your credit score as part of your overall application. Your creditworthiness may be based on additional factors such as income and credit report. No down payment is required to use Affirm’s services.
Affirm and Klarna are two separate buy now, pay later services. Both options enable consumers to make purchases that can be divided into multiple payments. Investigate both options to see where you can obtain the lower APR for your loan.
Michael Archambault is a senior writer at The Penny Hoarder specializing in technology.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
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