Afterpay review: Loans to buy now, pay later

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In a Nutshell

Afterpay is a lender that can help you finance purchases and pay them off over four installment payments without interest. Afterpay partners with more than 25,000 retailers, providing an alternative to using your credit card. But these loans come with late-payment fees, and approval isn’t guaranteed.

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Pros Cons
No interest charged on purchases Late-payment fees
Orders ship normally as they would with any form of payment Not all orders are approved for this loan
Split purchases into four equal installment payments Some retailers have minimum spend requirements

What you need to know about Afterpay personal loans

Afterpay offers an alternative purchasing method to traditional credit. If approved for an Afterpay loan, you can finance online and in-store purchases with participating retailers and pay them off in four equal installments.

If you use an Afterpay loan as your payment method for an online purchase, your purchases will ship as normal, even though you haven’t finished paying for them yet. You can use this loan option to pay for a variety of purchases, including clothing, home decor, electronics and health and beauty.

Keep in mind that not everyone will be approved for an Afterpay loan. And even if you’re approved, you may not be allowed to borrow the full amount you requested. Afterpay considers a variety of factors when making loan decisions, and spending limits are determined by your repayment history if you’ve been approved for an Afterpay loan in the past.

Afterpay splits purchases into four equal installments

When you make a purchase using Afterpay, you repay your loan over four equal principal-only installments due every two weeks. You’ll have to pay your first installment at the time of purchase and the remaining three over time.

Stores that partner with Afterpay may have requirements for minimum purchase amounts, and you’ll need to be authorized to use the installment payment feature.

Not all orders are approved

Afterpay doesn’t approve all orders. The lender considers a number of different factors, including how long you’ve been an Afterpay shopper and how many orders you’ve successfully repaid, before deciding whether to approve your order. If you make your payments on time, you may be approved for more money when making your next purchase. 

Late payment fees and financial hardship policy

If you fail to make on-time payments, you’ll be charged late payment fees. While late fees are capped at 25% of your purchase price, they can add up quickly. Only consider Afterpay if you know you’re going to be able to pay your installments on time and in full each time payment is due.

The company says it may help you work through financial hardship if you’re having trouble making payments due to unemployment or dealing with a natural disaster. For details on that, you’ll have to contact Afterpay.

How late payment fees can affect your credit

Who an Afterpay loan is good for

If you don’t always have the cash on hand to pay for your online or in-store purchases, Afterpay might be a short-term solution worth considering. As long as you can make on-time payments, Afterpay is an interest-free option and may be an alternative to using a credit card that does charge interest.

If you like budgeting and having an end date to your debt in sight, Afterpay may also be a good fit since you’ll be required to pay off your loan in four equal installments. If you make your payments on time, you may be approved to spend more. 

How to apply with Afterpay

To make a purchase with Afterpay, you’ll have to shop with an Afterpay retail partner. Once you’ve made your selections and are ready to check out, choose Afterpay as your payment method.

From there, you’ll have to create an account and provide the payment method for first installment.

Not sure if an Afterpay loan is right for you? Consider these alternatives.

  • Affirm loan: If you need more time to repay your online purchases, an Affirm personal loan may help you finance your shopping over a longer time period.
  • Avant personal loan: If you want to fund a home improvement project or consolidate debt, an Avant personal loan may be a better option.

About the author: Anna Baluch is a freelance personal finance writer from Cleveland, Ohio. You can find her work on sites like The Balance, Freedom Debt Relief, LendingTree and RateGenius. Anna has an MBA… Read more.