Affirm is a lender that lets you buy now and pay later, whether you’re shopping in-store or online. If you qualify for one of these short term loans, you will choose a payment schedule and then pay on affirm.com or on the Affirm app.
The company promises that borrowers will know in advance how much they will pay and that this amount will never increase. “Consumers who choose Affirm will never pay a dime more than they accept at checkout, even if they are late in payment,” says Silvija Martincevic, Commercial Director at Affirm.
Here’s how Affirm works and if this credit card alternative might be right for you.
How does Affirm works?
You can either select Affirm at checkout online or use an Affirm Visa virtual card for an in-store purchase. Affirm has partnered with more than 6,500 merchants, from Walmart to Peloton, and the virtual card is accepted in most places that accept Visa.
First, you will provide information such as your name, cell phone number, and date of birth to pre-qualify for a loan without hurting your credit score. You will then receive a real-time decision as to whether your loan has been approved and how much you can spend.
If you are approved, then you can choose to pay off your loan in three, six, or 12 months. However, your terms may be longer or shorter depending on the store, purchase, and your credit.
Upon payment you will see the total interest you will be paying and Affirm will never charge you more than that. If you pay faster than the agreed terms, you could save money.
Your first payment is usually due one month after the merchant processes your purchase, and subsequent payments are due every 30 days on the same date.
The Affirm virtual card is an option when a merchant does not offer Affirm online or when you want to use Affirm in a store. You can apply for a virtual card on the Affirm website or app and have the loan amount loaded onto the card for one-time use. You will need to enter the card number if you are paying online, or load the card to Apple Pay or Google Pay and use it in most places where Visa is accepted.
You may be able to have more than one Affirm loan at the same time. If you have an Affirm loan, you may have to wait to take out another one if you missed one payment, or you may be approved for one loan but not another. If Affirm cannot approve your loan, you will receive an email based on the decision.
Does Affirm have a credit limit?
Affirm approves lines of credit from $ 50 to $ 17,500, but larger amounts may require a down payment. Credit limits vary by merchant and will depend on your credit report and payment history with Affirm.
The lender doesn’t have a minimum credit score to qualify for a loan, and checking to see if you prequalify won’t hurt your credit score. What will hurt your score is not paying the bill on time if you are approved for a loan.
Does Affirm Affect Your Credit Score?
Some loans will not be reported to the credit bureaus. Affirm says it won’t report your loan to Experian if the annual percentage rate is 0% and you have four bi-weekly payments, or if you were given only one option: a three-month term at 0% .
The lender may report your payment history for other loans to Experian. Affirm can report any loan that has overdue payments, which can adversely affect your credit score.
If you use Affirm, these factors can affect your credit score:
- Payment history with Affirm
- Amount of credit used
- How long have you had credit
Partial or late payments can hurt your credit score and your ability to get another Affirm loan.
Does Affirm charge interest and fees?
Unlike credit cards, you don’t pay compound interest or interest on interest, and Affirm doesn’t charge late fees or penalties. You won’t have to pay any prepayment, annual fees or account maintenance.
Interest on loans through Affirm is charged only on the purchase amount, or the principal balance, saving you money. The merchant and the purchase amount for each loan will determine whether you pay interest. Many Affirm partners offer 0% financing, but APRs on other loans range from 10-30%.
The Affirm website has a few examples of what you might pay. For a loan of $ 500 at an APR of 15%, you can choose from three monthly payment plans: three payments of $ 170.94 and $ 12.82 in total interest, six payments of $ 87.04 and 22.24 $ in total interest, or 12 payments of $ 45.15 and $ 41.80 in total interest.
How do you pay your confirmed balance?
You can make or schedule payments on affirm.com or the Affirm app using your debit card or checking account, or you can send a check by mail.
Affirm sends email and SMS reminders for payments and offers automatic payments, but you must enable this option by logging into your account. This will automatically deduct your monthly payment on each due date from a debit card or bank account.
If you want to stop using automatic payment, you will need to deactivate it at least 24 hours before your next payment is due. For an overdue amount, you will need to schedule a one-time payment and will not be able to debit it automatically.
Is it safe to say?
Affirms claims that it meets all industry standards for the protection of customers’ personal information. You will need a mobile phone number to create an account and log in, as well as two-factor authentication to verify your identity.
Users are not responsible for unauthorized purchases and Affirm has dedicated teams to investigate such incidents.
If you have an issue with a purchase that you cannot resolve with the merchant, Affirm can open a dispute on your behalf as long as the transaction has taken place within the last 60 days.
Both parties have 15 days to plead their case and Affirm will make a decision within 15 days. If the dispute is resolved in your favor, you will receive a full refund of the purchase price.
How do returns work with Affirm?
You will need to contact the merchant to request a refund. While you are waiting for a repayment, you should continue to make any loan repayments due.
Affirm issues refunds to your original payment method, but you may receive a check when you’ve used a debit card or ACH payment. A refund may take more than 30 days to arrive in your account.
Should you use Affirm?
Buy now, pay later, services like Affirm can be of use to the right person, says Linda Jacob, Certified Financial Planner, Certified Financial Advisor and Director of Education at Consumer Credit of Des Moines.
“If used responsibly, especially at 0%, it can be a great tool,” says Jacob.
She cautions clients to always read the fine print and be aware of the interest rate and term. At higher interest rates, such as 30%, these loans can “get out of hand,” Jacob says.
“Anyone who is already in exorbitant debt should avoid taking more loans,” she says.
At the same time, Affirm could help someone who is “determined to buy,” says Charles H. Thomas III, certified financial planner and founder of Intrepid Eagle Finance in Clover, South Carolina. “They could pay less interest and fees with a model like Affirm than with a credit card balance.”
But like credit cards, these loans could easily lead you to overspending, Thomas says.
“Our desire for instant gratification is sometimes strong and difficult to overcome,” he says. “Most people prefer to wait to make a purchase when they have the cash available.”