Buy now, pay later apps enable shoppers to make purchases they may not be able to afford otherwise. Such financial services take a large purchase and break it up into smaller payments over a set amount of time.
Over the years, more buy now, pay later apps have appeared on the market, competing for attention from prospective shoppers. To help you find the best one, we compared five top competitors: Affirm, Afterpay, Sezzle, Klarna and PayPal.
Buy Now, Pay Later Services Compared
| Service | Interest rates | Payment schedule | Late fees | Where it's accepted |
|---|---|---|---|---|
Affirm |
0% on Affirm Pay in 4; 0%-30% on monthly |
Affirm Pay in 4 (every 2 wks) or monthly financing |
No late fees |
Everywhere online & in store w/ wireless pay |
Afterpay |
0% interest |
First of 4 payments immediately, then every 2 wks |
$10, followed by $7 if payment isn’t made |
Select online & in-store retailers |
Klarna |
0% for Pay in 4 and Pay in 30 Days; 0%-25% monthly |
Pay in 4, Pay in 30 Days & monthly financing |
Up to $7 on Pay in 4; up to $35 on monthly |
Everywhere online & select in-store retailers |
PayPal |
0% on Pay in 4; 9.99%-29.99% on Pay Monthly |
Pay in 4 and Pay Monthly financing |
No late fees |
Select online retailers |
Sezzle |
0% interest |
First of 4 payments immediately, then every 2 wks |
$10 |
Select online & in-store retailers |
What Is a Buy Now, Pay Later App?
Sometimes significant expenses occur and you may not have planned for them. Other times, you may want to reward yourself with a purchase you can’t afford all at once. Buy now, pay later apps are one type of financial service that can assist you with such purchases.
You can purchase at supported retailers using buy now, pay later apps, splitting large purchases into smaller, more manageable installments. While most services support only select retailers, some options enable purchases nearly anywhere.
The credit limit (spending limit) you receive for each app is based on different behind-the-scenes calculations by each service. If you are making a large purchase, you may want to sign up with a few apps to see which offers you the highest credit limit.
Buy now, pay later apps vary by interest rates (although all offer interest-free options), payment plans, retail partners and potential effect on your credit score. We examined features of five apps to help you find the best choice for your purchasing needs.
Buy Now, Pay Later Interest Rates
| Service | Interest rates |
|---|---|
Affirm |
0% on Affirm Pay in 4; 0%-30% on monthly |
Afterpay |
0% interest |
Klarna |
0% for Pay in 4 and Pay in 30 Days; 0%-25% monthly |
PayPal |
0% on Pay in 4; 9.99%-29.99% on Pay Monthly |
Sezzle |
0% interest |
Starting with the positive news: All buy now, pay later apps allow you to split large purchases into interest-free payments. However, not every option is interest-free, so it is vital to know the differences between payment plans.
All of the apps in our roundup — Affirm, Afterpay, Sezzle, Klarna and PayPal — offer zero-interest installments as part of their Pay in 4 plans. With Pay in 4, shoppers can make a purchase and divide it over four installments (with a down payment) every two weeks — no need to pay interest.
Any service that offers monthly payment installments will force you to pay interest on your purchase. Monthly payment installments are available via Affirm, Klarna and PayPal.
The services we examined charge interest ranging from 0% to 30% APR — depending on your approval. Klarna potentially offers the best interest rate, capping itself at 25%.
Buy Now, Pay Later Payment Schedules
| Service | Payment schedule |
|---|---|
Affirm |
Affirm Pay in 4 (every 2 wks) or monthly financing |
Afterpay |
First of 4 payments immediately, then every 2 wks |
Klarna |
Pay in 4, Pay in 30 Days & monthly financing |
PayPal |
Pay in 4 and Pay Monthly financing |
Sezzle |
First of 4 payments immediately, then every 2 wks |
When splitting up your large purchase into smaller installments, you generally have one of two options. The first is the increasingly popular Pay in 4 option, which enables you to divide your purchase into four separate interest-free payments over six weeks.
All of the buy now, pay later apps we feature in this guide support the Pay in 4 financing option, with the first payment due at the time of purchase (a down payment). After that, you will owe an additional three charges every two weeks via your bank account.
Affirm, Klarna and PayPal also offer more traditional monthly payments, but they will charge interest. Depending on the size of your purchase and the options provided by the financing company, you will split your purchase over several months.
PayPal offers the most extended financing option, with monthly payments split up to 24 months. More typical offerings span from six months to a year.
Buy Now, Pay Later Late Fees
| Service | Late fees |
|---|---|
Affirm |
No late fees |
Afterpay |
$10, followed by $7 if payment isn’t made |
Klarna |
Up to $7 on Pay in 4; up to $35 on monthly |
PayPal |
No late fees |
Sezzle |
$10 |
No one enjoys late fees, but life does happen and you may miss payments occasionally. Out of the buy now, pay later apps we examined, two offer no late fees — Affirm and PayPal.
Afterpay charges the highest late fees on Pay in 4 plans — $10 first, followed by an additional $7 if the payment isn’t made promptly. Klarna charges the highest late fees for monthly payments at a whopping $35.
If you’re worried about late fees, stick with Affirm or PayPal. Just remember that some services may report late payments to credit bureaus, so make payments on time whenever possible.
Buy Now, Pay Later Shopping Availability
| Service | Where it's accepted |
|---|---|
Affirm |
Everywhere online & in store w/ wireless pay |
Afterpay |
Select online & in-store retailers |
Klarna |
Everywhere online & select in-store retailers |
PayPal |
Select online retailers |
Sezzle |
Select online & in-store retailers |
Most buy now, pay later apps have partnered with select retailers at checkout, so you cannot simply finance at any store you wish. AfterPay, Sezzle and PayPal require you to shop with retail partners if you want to use their services.
Affirm and Klarna break that mold, allowing you to shop at any online store. Affirm goes one step further, allowing you to shop at nearly any physical retail store using a virtual credit card via Apple Pay or Google Pay.
Before you begin shopping, we recommend visiting the website of the retailer you wish to shop with and the buy now, pay later app you want to use. You may find a payment plan option with one of the buy now, pay later services mentioned above at checkout.
Alternatively, you can visit the websites of the buy now, pay later services. Each service that works only with select retailers provides a list of shopping partners you can view before purchasing.
Buy Now, Pay Later Credit Score Effect
| Service | Credit score effect |
|---|---|
Affirm |
Soft credit check; may report history to Experian |
Afterpay |
No credit check |
Klarna |
Soft credit check for Pay in 4 and Pay in 30 |
PayPal |
Soft credit check |
Sezzle |
Soft credit check for Pay in 4 |
The lack of an effect on credit scores and credit reports is one reason that customers have welcomed buy now, pay later apps.
Unlike a traditional line of credit, such services generally do not perform a hard credit check or report your balance to credit bureaus.
Out of all the services we reviewed, only one option performs absolutely no check to determine your creditworthiness — Afterpay. All other services perform only a soft credit check, which does not affect your credit score with credit bureaus. If you aren’t familiar with credit checks, check out our guide on the difference between a hard and a soft credit check.
Regarding reporting history, most buy now, pay later apps choose to abstain, but Affirm is the exception, potentially reporting payment history to one of the credit bureaus, Experian.
Which Buy Now, Pay Later Service Is Best for You?
Our favorite buy now, pay later app for most shoppers is Affirm. The financial service offers monthly and interest-free Pay in 4 financing. The monthly interest rate with Affirm is competitive with other services but is higher than potential offerings from Klarna. Additionally, Affirm has no late fees.
Otherwise, we suggest selecting the buy now, pay later service available with the retailer with which you wish to shop. All buy now, pay later services offer Pay in 4 financing options to pay over six weeks. Those looking to finance monthly need to use Affirm, Klarna or PayPal (but they will charge interest).
None of the services we looked at impacted credit scores (thanks to the use of a soft credit check) or reported to major credit bureaus. If your credit score is your primary concern, you can likely choose any of the aforementioned services without much worry.
Do keep in mind that Affirm may report payment history to Experian.
Frequently Asked Questions (FAQs)
Check with the retailer you wish to purchase from to get an idea of the buy now, pay later apps they accept. Otherwise, you can also visit the websites of popular financing services for a list of supported retailers and merchants.
Out of the buy now, pay later apps we’ve researched, only three options provide monthly purchase payments. Affirm, Klarna and PayPal allow you to split purchases over months, with PayPal offering up to 24 months of financing, but they will require you to pay interest.
Amazon does not partner with any specific buy now, pay later service. However, you can use Affirm for shopping and financing at Amazon, as the service will provide you with a virtual credit card to use at checkout.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
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