Buy Now Pay Later, BNPL for short, is one of the newest, most efficient ways to get your hands on credit. With BNPL, you can make a purchase and get what you need now while spreading your payments out over the weeks or months to come. Usually the BNPL provider that you use depends heavily on which merchant you’re shopping through. Although some merchants, such as Target and Amazon, accept several different providers. So you’re trying to figure out: Affirm vs. Klarna. Here are the major similarities and differences between the two.
What Are Affirm and Klarna?
Affirm and Klarna are BNPL providers that make it easier for you to buy things from brick-and-mortar or online stores using short-term credit. When you pay with Affirm or Klarna in-person or through online shopping, you can get what you bought now and then repay the BNPL provider in installments, often interest-free, over the next several weeks or months.
From 30,000 feet up, Affirm and Klarna have similar offerings; however, they differ when it comes to the nitty gritty.
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Major Differences Between Affirm and Klarna
Affirm was founded in San Francisco, California, in 2012.
Klarna was founded in Stockholm, Sweden, in 2005.
Countries of operation
Affirm operates in the U.S. and U.S. territories.
Klarna is available in the U.S., Great Britain, Sweden, Norway, Finland, Denmark, Germany, Austria, the Netherlands, Belgium, and Switzerland.
Affirm services more than 102,000 merchants, including Walmart, Target, Priceline, and Williams Sonoma.
More than 400,000 merchants around the world accept Klarna. Some merchant partners include Etsy, Macy’s, Sephora, and Lululemon.
Affirm offers two payment options.
The first option is a pay-in-four model, which allows you to make four payments every two weeks, interest-free, with the first payment due at checkout. The second option is a monthly payment model that allows you to space your payments out over 3-60 months. Monthly installments can include an interest rate.
Klarna offers several different payment options to divide up your purchases.
- Pay in 4: One of the most popular payment options, Pay in 4 allows you to split up your total balance into four equal installments with the first payment due at checkout. The remaining payments are due automatically every two weeks, interest-free. This payment option requires no minimum credit score.
- Pay Now: Pay the total amount upfront either online or in-store using the mobile app.
- Pay in 30 Days: No down payment — pay nothing upfront. Get your purchase now, then pay the full balance in 30 days, interest-free.
- Pay Over Time: Ideal for larger purchases, Pay Over Time allows you to break up big balances into smaller installments to be paid over 6–24 months. Interest rates range from 0–29.99%.
According to Affirm’s help center, the provider does not allow you to reschedule payments or give you more time to pay on a monthly basis. However, you can select which day of the month that you’d like to make payments if you set up automatic payments, which can come in handy if you’re looking to align your BNPL installment dates with your cash flow.
Klarna allows you to reschedule your next payment date up to 14 days later once per order. You can reschedule within the Klarna app by visiting the Payments page, selecting the order that you would like to reschedule a payment for, and tapping Extend Due Date.
Affirm does not impose credit limits. If you make a purchase using the BNPL provider, Affirm will prequalify you for a certain loan amount. Prequalifying will not affect your credit score, nor do you have to use the full amount that Affirm prequalifies you for.
Prequalification depends on a number of factors, including:
- Payment history with Affirm
- Overall credit history
- Length of time that you’ve had an account with Affirm
- Interest rate of the merchant you’re applying for
- Current economic conditions outside of your own personal finance history
There is no spending limit when you shop with Klarna. However, when you make a purchase, Klarna determines on a case-by-case basis whether you are eligible to receive the short-term loan.
To view your estimated spending amount, you can take a look at your Purchase Power in the app. This amount is subject to change and based on factors like your outstanding balance and your payment history with Klarna.
Late fees and other penalties
Affirm does not charge fees to open an account or take out a loan. It also does not charge late payment fees. However, your credit score may be negatively affected by a late payment.
If a payment does not go through, Klarna will charge you a late fee of up to $7. Klarna will then try to reprocess the payment, and if it fails again, the amount will be added to your next payment.
You should note that if you miss a payment, you will not be able to continue using Klarna until you’ve settled up your outstanding balance. Klarna will also report your late or missing payments to the credit bureaus, which can negatively affect your credit history and credit score.
Soft credit check or hard credit check
Affirm and Klarna do not do hard credit checks when you make a purchase using the service. They both run a soft credit check to get a sense of your credit history and determine if you are eligible for a short-term loan. Soft credit checks provide enough information to give the BNPL services a sense of your creditworthiness without penalizing your credit score with a hard inquiry.
How to Sign Up for Affirm
You can sign up for Affirm using the Affirm app, at affirm.com, or at an Affirm-partner store.
- Go to the Affirm website, download the app, or choose to pay with Affirm at checkout
- When prompted, enter your full legal name, mobile number, email address, date of birth, and the last four digits of your social security number
- Complete sign-up
How to Sign Up for Klarna
You can sign up for Klarna using the Klarna app, at klarna.com, or selecting Klarna as your payment method at a participating store.
- Go to the Klarna website, download the app, or click that you’d like to pay with Klarna when making a purchase
- Provide the necessary personal information
- Complete sign-up
How to Use Buy Now Pay Later Responsibly
Buy Now Pay Later (BNPL) services allow consumers to make purchases online or in-store by breaking up larger ticket items into a small number of fixed installment payments. BNPL is attractive to consumers because purchases are typically interest-free and don’t involve many of the fees that come with bank accounts and credit cards.
The popularity of BNPL has grown exponentially in recent years — and for good reason. These payment options provide more opportunities for people of underserved and underbanked populations. However, there are also a number of potential risks involved.
Advantages of Buy Now Pay Later
- You get easier access to goods and services
- Customers pay low-to-no fees and interest charges on their payment plan
- You can maintain and build your credit score
Disadvantages of Buy Now Pay Later
- It is easy to overspend
- There are potential fees or interest charges and credit score damage
- Buy Now Pay Later can be difficult to manage
Frequently Asked Questions
Affirm vs. Klarna: Which is better?
It is not a matter of which Buy Now Pay Later service is better. Rather, it is important to consider whether BNPL is the right choice for you at all.
The service that you use as a customer depends on which merchant or company you are purchasing from and in what country you are located. All brick-and-mortar and online retailers don’t partner with all BNPL companies.
Before deciding to make a purchase with BNPL, it’s important to consider: how much you really want or need the product or service, your budget, cash flow, and other debt obligations, including credit card debt.
What happens if I never repay Affirm or Klarna?
If you fail to make your scheduled repayments through Affirm, Klarna, or any other BNPL providers, you can run into credit and financial issues.
Klarna charges you late fees on missed payments. Your account may also get disabled, meaning that you would not be able to make future purchases with the BNPL service. Klarna also reports late and missing payments to the credit bureaus, so if you fail to make a payment, it can negatively impact your credit history and credit score.
Affirm, on the other hand, does not charge late fees. The BNPL provider also reports missing payments to the credit bureaus, which can damage your credit.
Are Affirm and Klarna legit?
Affirm and Klarna are both legitimate and secure services. Both keep customer data safe and sound and act much the same as credit cards, personal loans, and payday loans except with shorter-term repayment plans.