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The next time you make a purchase online, a new financing option may be available. These pay-in-four loan programs from companies like Klarna and Affirm will allow you to make purchases today and pay over time without a credit card—usually in four payments. Klarna and Affirm are two of the most popular buy now, pay later (BNPL) apps that offer easy financing for online and in-store purchases. These loans tend to be easy to get approved for and many purchases have no interest or fees as long as you make every payment on time.
We've compared two BNPL financing options—Klarna vs. Affirm—to help you decide which is better for your situation. Ultimately, our choice is Affirm because it does not charge any fees, even when you pay late. Additionally, customers can choose from multiple payment options at checkout and finance purchases up to $17,500. Soon, customers will also be able to make purchases with the Affirm Card and convert eligible purchases into pay-in-four transactions.
- Amount Due at Purchase: 25%
- Repayment Terms: Pay 25% every 2 weeks
- Interest: None if paid on time
- Credit Check Required: Soft credit check
- Late Fees: $7
- Popular Brands Available: Lululemon, Macy's, Bed Bath & Beyond, Sephora
- Other Financial Products: Pay in 30 days with no interest, 6- to 36-month financing, Virtual card numbers
No interest on pay-in-four financing
Offers multiple ways to finance purchases
Create virtual card numbers for other stores
Set price alerts in the app on your saved items
Requires a soft credit check
May report missed payments to credit bureaus
Charges late fees
- Amount Due at Purchase: As low as $0
- Repayment Terms: Varies by loan type
- Interest: 0% or 10% to 30%
- Credit Check Required: Varies by loan type
- Late Fees: None
- Popular Brands Available: Peloton, Target, Pottery Barn, Walmart.com
- Other Financial Products: Virtual card numbers, Affirm Savings Account, Affirm Debit+ card
Interest rates as low as 0%
Does not charge late fees
Purchase amounts up to $17,500
Terms up to 48 months may be available
Interest rates as high as 30%
May require a credit check
Prequalification does not guarantee transactions are approved
At a Glance
|Amount Due at Purchase||25%||As low as $0|
|Repayment Terms||Pay 25% every 2 weeks||Varies by loan type|
|Interest||None if paid on time||0% or 10% to 30%|
|Credit Check Required||Soft credit check||Varies by loan type|
|Popular Brands Available||Tommy Hilfiger, Bed Bath & Beyond, Sephora, Nike||Peloton, Target, Pottery Barn, Walmart.com|
|Other Financial Products||Pay in 30 days with no interest, 6- to 36-month financing, Virtual card numbers||Virtual card numbers, Affirm Savings Account, Affirm Debit+ card|
Klarna vs. Affirm: Terms
Klarna and Affirm both offer buy-now-pay-later (BNPL) financing for purchases at participating retailers. Pay-in-four financing is Klarna's primary option, while Affirm's repayment terms vary by lender and the size of your purchase.
When you make a purchase with Klarna's pay-in-four loan product, you'll pay 25% immediately, then the remaining balance is split into three payments that are made every two weeks. Within six weeks, your entire purchase is paid off without incurring any interest or fees if you pay on time.
Affirm offers several repayment terms for customers to choose from at checkout. The length of repayment varies and ranges from popular pay-in-four loans to loans up to 36 months. Affirm offers loans up to $17,500, but depending on the retailer you are purchasing from, you may be required to make a down payment at the time of purchase.
Klarna vs. Affirm: Credit Requirements
During the pay-in-four approval process, Klarna performs a soft credit check on your credit history. This does not affect your credit score and does not show up on your credit report. Klarna does not have a minimum credit score requirement for its pay-in-four credit product. While Klarna does not report on-time payments of pay-in-four loans to the credit bureaus, it may report missed payments.
However, if you want to take advantage of Klarna's longer-term financing options for up to 36 months, then a hard credit check is required. The approval will be based on your credit score and payment history.
When you create an account with Affirm, it will perform a soft credit inquiry to prequalify you for purchases. Your credit score may be affected by making a purchase, your payment history, how much credit you've used, and how long your account has been opened.
Klarna vs. Affirm: Interest and Fees
Klarna does not charge any interest or fees as long as your payments are on time. When you miss a payment, Klarna will try one more time to collect the payment. If the payment is not made on the second attempt, the missed amount will be added to the next payment with a $7 fee added on top.
There are no hidden fees with Affirm. It does not charge late fees on its loans, even if you pay late. Affirm has funded over 16 million transactions to date and has yet to charge a late fee. The company makes money by charging a commission to businesses for handling the financing and some customers pay interest on their loans.
Klarna vs. Affirm: Mobile App
With Klarna and Affirm, you can shop either online or through a mobile app. On the mobile app, you can perform standard actions like viewing your purchase history, track deliveries, see your payments, and update your payment method.
Klarna's app is available for both Apple and Android. In the app, you'll find new deals every day with exclusive deals and discounts for Klarna users at over 250,000 retailers. And if a U.S. online retailer doesn't offer Klarna, you can create a virtual card number to make a purchase and pay-in-four. When you join Klarna's free rewards club, you'll earn rewards on your purchases.
The app provides automatic price drop alerts, and the more you use pay-in-four while shopping with Klarna and paying your bills on time, the more purchasing power you'll unlock with a higher spending limit and receive even more exclusive deals and offers.
Affirm's app is available for both Apple and Android as well. There are more than 207,000 merchants that offer financing through Affirm. You can complete purchases online or at a physical store with the mobile app. In the app, you can browse offers from participating merchants and receive exclusive offers with financing as low as 0%. The app also allows you to open a high-yield online savings account that has no minimums or fees.
Klarna vs. Affirm: Other Products
While pay-in-four purchases at checkout are gaining in popularity, Klarna and Affirm offer other financing options for their customers as well.
Pay in 30 Days or six- to 36-Month Financing: If you don't want to use Klarna's pay-in-four financing, you can choose "Pay in 30 days" or six- to 36-month financing. Pay in 30 loans have no interest and are best for people who want to order items to try, return what they don't like, then pay for the rest. The interest rate on Klarna's six to 36-month financing options ranges from 0% to 24.99%.
Virtual Card: For stores that do not offer Klarna at checkout, you can create a virtual card online or in the app that works just like a credit card. It is a one-time use card that can be used at any U.S.-facing online store.
Affirm's loan periods often go beyond the four bi-weekly payments of traditional buy-now-pay-later services. When making a purchase, you are presented with options and get to choose how many payments you want to make. This makes it easier to lock in payments that match your budget. You'll never pay more than what you see at checkout since Affirm does not charge any hidden fees.
Affirm Savings Account: In addition to lending products, Affirm also offers the Affirm Savings Account, which is an FDIC-insured, high-yield savings account that has no minimum balances or fees. The interest rate offered is 2.5%, but interest rates vary over time. You can open your account with just one penny.
Credit Card: Affirm offers a debit card that allows customers to split big purchases into smaller, budget-friendly payments. Every eligible purchase over $100 can be split into four easy payments, just like the pay-in-four loans. The card has no annual fees, no overdraft fees, and no late fee.
How Do Klarna and Affirm Work?
Klarna and Affirm are point-of-sale financing companies that enable customers to buy now and pay over time, similar to how a credit card works. The major difference is that most buy-now-pay-later services perform instant credit decisions on every transaction and do not charge interest if you make your payments on time. You'll pay 25% upfront, then be charged 25% of the original purchase amount every two weeks until your balance is paid in full six weeks later.
What Is the Minimum Credit Score for Affirm and Klarna?
Neither company discloses the minimum credit score you need to have in order to get approved. In general, higher credit scores are more likely to get approved for a loan. Since pay-in-four loans are short-term in nature and 25% is paid immediately, these loans tend to have a high approval rating. Because the pay-in-four loans are so short, they generally are not reported to the credit bureaus, unless a borrower starts to miss payments. For longer-term loans, your credit score is a more important factor in the decision with both Affirm and Klarna.
Does Klarna or Affirm Affect Your Credit Score?
Like most buy-now-pay-later services, Klarna and Affirm use a soft credit check when approving your transactions. They do not report your pay-in-four loans or payment history to the credit bureaus. Because these loans are closed within six weeks, if you make all of the payments on time, the payment history is not long enough to be worth reporting to the bureaus. However, missed payments may be reported to the credit bureaus, which could negatively affect your credit score.
Longer-term loans generally require a hard credit inquiry and those loans are reported to the credit bureaus. Provided that you make each payment on time, these loans could help build a stronger credit history.
To determine whether Klarna or Affirm is the best buy-now-pay-later app, we analyzed the features of each service, interest rates, fees, and more. We researched their loan options, how many stores accept their financing, and how they impact users' credit scores.