Afterpay personal loan review: Loans to buy now, pay later

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In a Nutshell

Afterpay lets you to make a purchase at participating in-person and online retailers and pay it off over time. With Afterpay, you may be able to pay off your purchase in installments over six weeks without having to pay interest.
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Pros

  • Avoid interest charges
  • Split purchases into four equal installment payments over six weeks
  • No fees unless you have a late or missed payment

Cons

  • Late payment fees
  • Loan approval isn’t guaranteed at purchase time

What you need to know about an Afterpay personal loan

Afterpay is a buy-now, pay-later service that lets people make a purchase at participating in-person and online retailers and pay them off in four installments over six weeks. You’ll need to select Afterpay as your payment method when you check out to see if you qualify.

We’ll break down how Afterpay works and what you need to know before you apply.

How Afterpay works

Afterpay may allow you to divide up the cost of your purchase and pay it off in multiple smaller payments with no interest charges. If you can make all your payments on time, you won’t have to pay any fees to use this service. But if you don’t make payments on time, you’ll get charged late fees.

Afterpay may perform a soft credit check when you sign up to use the service. The company also may approve you for larger amounts if you’ve paid off previous purchases with Afterpay.

You can use Afterpay to split a purchase into four payments, which you can pay off over the course of six weeks. You usually have to make your first “installment” payment at the time of purchase.

Late payment fees

If you’re unable to make a payment on time, you’ll be charged late fees of up to 25% of the purchase price. Your payment is considered late if you don’t make one of the installment payments within a 10-day grace period after the due date.

Credit or debit card required

You’ll have to associate a credit or debit card with your Afterpay account and make sure you have enough credit or funds to make installment payments on the dates specified in your payment schedule.

Remember that while Afterpay says it doesn’t charge you interest — if you use a credit card to make your Afterpay payments, that card may have interest charges, unless you’re careful to pay off the card’s balance in full before interest accrues.

A closer look at an Afterpay personal loan  

  • Afterpay has an app and a “card” — You can download the Afterpay app to use for online shopping or get an associated digital “card” for in-person purchases. To make the process simple in-store, you can set up an Afterpay Card in the app and then add it to your digital wallet, such as Apple Pay, Google Pay, or Samsung Pay.
  • Exclusive offers — Some retailers (including Macy’s, Victoria’s Secret and Yeti) partner with Afterpay to offer exclusive options that you can’t get without using the app.
  • Loan amounts may grow over time — All new Afterpay customers get a spending limit “of about $600” to start with, according to the company. But eventually that spending limit can grow if you make payments consistently on time.
  • You can return purchases — When making a return, your purchase will be refunded to the original payment method, and it typically takes five to seven business days to get your refund.
  • Can shop in store or online — With Afterpay, you can make purchases online or in store. To make the process simple when you’re shopping in a store, you can set up an Afterpay Card in the app and then add it to your digital wallet, much like Apple Pay, Google Pay, or Samsung Pay.

Who is an Afterpay loan good for?

Afterpay may be a good option for people looking to spread out the cost of a purchase without having to use a credit card.

If you like budgeting and having an end date to your debt, you’ll probably appreciate that you can pay off your loan in four equal installments with Afterpay. And by making your payments on time, you may be approved to spend more.

Buy-now, pay-later apps aren’t for everyone, though. In a 2021 joint Credit Karma/Qualtrics survey, 38% of respondents said they had fallen behind on payments at least once in a buy-now, pay-later plan — and a solid majority of that group saw their credit scores drop afterward.

How to apply with Afterpay

To apply to use Afterpay, you need to first download its mobile app, which walks you through account setup and how in-store shopping works.

You’ll need to provide the following information:

  • Email address
  • Phone number
  • Delivery address

For online purchases, you don’t need to register before you use Afterpay for the first time. Instead, you can choose Afterpay as your payment method at checkout and provide payment details like you normally would to complete your purchase. After your first order is approved, your Afterpay account is automatically created.

To finish the process, you just need to visit Afterpay’s website or download the Afterpay app to create a password so you can log into your account to make future purchases.

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

  • Affirm: Similar to Afterpay, Affirm offers buy-now, pay-later loans at major retailers. You may pay interest on your purchase, but typically won’t be subject to any fees. Affirm offers much larger loan amounts than Afterpay — up to $17,500 — although a down payment may be required.
  • Klarna: Klarna also allows you to pay off purchases monthly or in four installments.

About the author: Jacqueline DeMarco is a freelance writer based in southern California who graduated from the University of California Irvine with a degree in literary journalism. She writes about a wide range of topics, including fin… Read more.