Klarna at a glance:
- Loan amounts: Varies by retailer and individual
- Loan terms: 30 days to 24 months
- Speed of funding: Within minutes
- Fees: Late fees
- Credit requirements: Not disclosed
When you need to buy something before you’ve stashed enough money in savings for it, Klarna lets you split the purchase amount into installments. Klarna offers short-term, interest-free financing — a potentially helpful alternative to using a credit card.
Klarna also offers longer-term financing options with up to 24 months for repayment, but these longer terms can come with high high annual percentage rates (APRs).
Pros
- Interest-free financing options available
- Potential for longer repayment terms
- Qualify with a soft credit check
Cons
- Late fees may apply
- Unclear spending limits
- Some plans not available in all 50 states
What makes Klarna personal loans stand out?
Unlike some buy-now, pay-later (BNPL) platforms that only allow you to use their payment plans through their partner retailers, you can use the Klarna app with its partners or any retailers that accept Apple Pay. And you can use the Klarna card or one-time card service at any retailer that accepts Visa.
Here are some key features to know about Klarna:
There are three BNPL payment plans
Depending on your budget and the size of your purchase, you may want to apply for Klarna’s short-term, interest-free financing, or a longer-term loan that you’ll have to repay with interest.
Pay in 30: With Pay in 30, you can make a purchase and pay for it up to 30 days later without interest.
Pay in 4: Pay in 4 is an interest-free payment plan. You repay the purchase amount in four installments with autopay every two weeks.
Pay over time: Pay over time is a personal loan that allows you to repay the purchase amount, with interest, in monthly installments. Depending on the purchase amount, you can have anywhere from three to 24 months to repay the loan.
| Klarna payment plan | Interest | Repayment terms |
|---|---|---|
| Pay in 30 | Interest-free | 30 days |
| Pay in 4 | Interest-free | 8 weeks |
| Pay over time | 0% to 35.99% | 3 to 24 months |
You may be eligible for interest-free financing
Klarna’s Pay in 30 and Pay in 4 options are interest-free, so you can split up the cost of your purchase without worrying about added interest charges or fees.
No annual fees
While credit cards can allow you to make a purchase upfront and spread out the cost over weeks or months, credit cards usually charge interest, and some cards have annual fees. By contrast, Klarna doesn’t charge an annual fee or membership fee.
What are the downsides of Klarna?
Before using Klarna, consider these potential drawbacks:
Late fees can be expensive
While the Klarna Pay in 30 and Pay in 4 payment plans are interest-free, there is a risk of late fees.
The late fee can be up to $7 if any scheduled payment is unpaid after 10 days. The total of late fees charged on one order can be as high as 25% of the total purchase amount.
Restrictions on some types of purchases
While you can use Klarna with most merchants and retailers, there are some restrictions. You can’t use Klarna for the following:
- Rent payments
- Utility bills
- Gift card purchases
- Medical care
- Online gaming or gambling
- Government bills or fines
- Alcohol or drugs
Late payments can affect your credit
While Klarna doesn’t report Pay in 4 or Pay in 30 late fees to the credit bureaus, it does report late payments that occur under a Pay over time payment plan. Klarna reports your payment activity to TransUnion and Experian, so a missed payment can hurt your credit.
How to qualify for a Klarna personal loan
To use Klarna for an upcoming purchase, follow these steps:
- Download the app. Download the Klarna app and create a profile.
- Connect your debit or credit card: Once your profile is set up, add a qualifying debit or credit card or a connected bank account.
- Shop: You can shop through the Klarna app. When you’re ready to checkout, click on the Klarna logo to check your financing options. Depending on the merchant and purchase amount, you may have several payment options to choose from.
- Wait for approval: Each purchase requires you to submit to a soft credit check, which doesn’t affect your credit score.
Not sure if Klarna is right for you? Consider these alternatives.
- Affirm: For larger purchases, Affirm offers payment plans with terms as long as 48 months, which may give you more affordable payments.
- Afterpay: With Afterpay, you can qualify for a higher spending limit over time by making payments on time.
FAQs about Klarna
Yes, Klarna reports information about longer-term loans and payment activity to Experian and TransUnion. Late payments can damage your credit. Klarna doesn’t report information about Pay in 4 or Pay in 30 activity.
Yes, Klarna reports late payments on longer-term loans to the credit bureaus. Your payment history is the biggest factor making up your credit score, so a missed Klarna payment can hurt your scores.
Yes, there are some downsides to Klarna financing, including late fees and damage to your credit if you miss a payment, and double-digit APRs on some payment plans.
Whether Klarna can help you build credit depends on the financing plan. Klarna’s longer term financing options, such as those with 12- or 24-month terms, are installment loans and are reported to the major credit bureaus, so they can potentially help your credit if you make required payments on time. Shorter-term financing is not reported, so it doesn’t impact (or benefit) your credit.
If you miss a Klarna payment, you may have to pay a late fee, and Klarna may report the delinquency to the major credit bureaus.
Some BNPL platforms, but not all, report installment plans and payment activity to the major credit bureaus. In some cases, taking out a loan or missing a payment can affect your credit.
Our methodology: How Credit Karma rates personal loans
Credit Karma’s editors evaluate personal loans by reviewing key features and how they compare to other popular lenders. Those features fall into the following three categories:
- Affordability — We start by checking if a lender’s rates are competitive: Are they higher than average, or are they lower than many competitors? Then, we analyze if fees — particularly origination fees — may make your loan more costly. Last, we’ll check if the lender offers rate discounts for things like automatic payments that may reduce your rate.
- Customer-friendly features — Taking out a personal loan is a big financial commitment, so we prioritize lenders that make things easier for you. For instance, does a lender offer a wide range of loan amounts for people with different borrowing needs? Does it offer at least several loan terms to give you more flexibility with your monthly payment? And, crucially, can it fund your loan quickly? A lender will also get bonus points for offering direct payments for debt consolidation or other customer-friendly features.
- Transparency — We believe personal loan terms should be easy to find and decipher. Prequalification, which lets you check what rate you may qualify for without a hard credit inquiry, is particularly important. We also check to see if a lender has been recently penalized by regulators.
*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the personal loan, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.