Have you ever seen an item you wanted but couldn’t immediately afford? Maybe you found a great deal on the last day of a sale, but your paycheck wouldn’t hit your account until the next week. If so, you may be the kind of customer buy now, pay later (BNPL) service providers are looking for.
This alternative to credit cards is gaining traction among younger buyers. BNPL lets customers make purchases immediately and pay over time, often with minimal credit checks or none at all. The number of companies that offer this service is increasing rapidly — and so are the variety of terms offered.
Let’s take a look at some of the best buy now, pay later service providers and navigate their wide-ranging terms.
PayPal is already well known as a worldwide payment processing system, and its PayPal Credit service is one of the leading BNPL service providers.
PayPal Credit offers a reusable line of credit on purchases at stores that accept PayPal — so merchants who contract with PayPal can offer their customers an additional way to pay. Once a customer is approved for PayPal credit, they start out with a credit line of at least $250.
PayPal Credit purchases under $99 are interest-free if you pay off your balance in full each month by the due date. Purchases over $99 are interest-free if paid off in full in six months.
If you extend your payments past the due date, the APR is 23.99 percent, and interest accrues from the purchase date. On top of that, late payment fees can be up to $40.
Pay in 4
PayPal Credit isn’t the only buy now, pay later option that PayPal offers. Pay in 4 is another, and it’s fairly simple.
When you buy something, you make a down payment during checkout after selecting Pay in 4 as the payment method. After that, you follow a payment plan — three remaining payments every two weeks — and then you’re done.
When you select Pay in 4, PayPal will determine whether you’re approved to use the service. You’ll then provide a debit or credit card that PayPal will use for the payments if you don’t already have one associated with your PayPal account.
You can use Pay in 4 for purchases between $30 and $1,500, but it’s not available in every state. Also, PayPal might run a soft credit check during the approval process, but it won’t affect your credit score.
Australia-based Afterpay is similar to PayPal in that it offers interest-free terms (if you make on-time payments), quick approval, and no fees. Afterpay partners with more than 85,000 retailers, which is why it’s one of the most popular BNPL service providers.
While Afterpay doesn’t charge any interest, it does charge fees for late payments — and those fees can be as high as 25 percent of an item’s purchase price.
Klarna partners with brand names like Adidas and retailers like Macy’s to create an easy in-store and online shopping experience. It offers flexible payment options — like paying in four installments or in 30 days — and as long as you make your payments on time, it doesn’t charge interest. Klarna also offers financing for six to 36 months.
Klarna’s app includes links to its affiliated online stores. But you’ll find Klarna has little tolerance for regularly late payments. If you continue to miss payments, Klarna will simply consider you in default and no longer allow you to use the service.
Splitit is unique in that you don’t have to apply for it. Splitit uses your existing credit or debit card, so whether you have good or bad credit is irrelevant — if you have a card, you’re already approved.
You can split your purchase into payments made over three, six, 12, or 24 months. Because Splitit uses your credit card, if that card has reward points associated with it, you can still earn those points with your Splitit purchases.
Splitit isn’t associated with as many retailers as the previously mentioned services. Also, because Splitit doesn’t do a credit check, care about your credit history, or use any formal approval process, making on-time payments on a Splitit purchase won’t improve your credit score.
Splitit also only works with Visa and Mastercard. It doesn’t accept American Express or Discover, and some merchants won’t accept debit cards.
Affirm is a BNPL service provider based in San Francisco. While its terms are similar to other providers’, a big differentiator is that one of its biggest clients is also one of America’s largest retailers — Walmart.
While Affirm is independent of Walmart and has its own app that lets you buy now and pay later at many different, well-known retailers — like Williams-Sonoma, Pottery Barn, Nordstrom, and Neiman Marcus, to name a few — its service and monthly payment options are integrated directly into Walmart’s app.
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