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Best buy now, pay later apps

Pay later options can help meet your immediate needs

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Written by Sandy Baker
Edited by Cassidy McCants

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    buy now pay later on phone

    Buy now, pay later companies let you finance your purchases at specific stores with a few interest-free payments. Approval is instant and doesn’t require a credit check. If you’re considering this financing option, be sure to read through the terms carefully so you know what to expect and what your financial responsibilities are.

    We looked at some of the popular buy now, pay later apps to help you decide if using one is right for you.

    Compare top buy now, pay later companies

    You want to choose wisely when selecting a buy now, pay later option. Look at the most current terms and conditions provided so you know exactly what to expect (these may change over time). A good buy now, pay later company has strong reviews, transparent terms and wide availability. Our top picks are Sezzle, Klarna, Splitit, Perpay and Afterpay.

    Methodology: The ConsumerAffairs Research Team chose our top buy now, pay later picks by comparing nine popular companies on online reputation, rate transparency and availability of services.

    • Online reputation: We compared ratings and reviews across the internet, including the Apple App Store, Google Play and Trustpilot, and gave preference to companies with the highest average rating. We also checked in with the Better Business Bureau for government actions related to marketplace misconduct within the last year.
    • Transparency, interest and fees: We gave preference to companies with clear terms and easy-to-access information about fees. None of our picks charge interest.
    • Availability: We confirmed that all of our picks are currently available throughout the United States. We also eliminated lead generators.
    Sezzle
    • Spending limit: Based on credit, order history and how long you’ve been with Sezzle
    • Interest rate: 0%
    • Installments/terms: Four payments over six weeks
    • Late fees: Up to $5 to reschedule payment; reactivation fee up to $10 after failed payment

    Sezzle lets you make a purchase and pay it off in four interest-free payments over six weeks. You pay 25% upfront, then make another payment every two weeks until you pay off the purchase. Sezzle is available at more than 47,000 stores; you can make purchases in stores and online.

    The company does a soft credit pull to determine if you qualify, so applying doesn’t affect your credit score. You must be 18 and have a phone number that can receive texts, an email address and a debit or credit card. The Sezzle app makes it easy to find deals and shop.

    Klarna
    • Spending limit: Based on credit, payment history and outstanding balance
    • Interest rate: 0%
    • Installments/terms: Four payments over six weeks
    • Late fees: Up to $7 per installment payment; returned payment fee up to $25

    Klarna is a good option for those who want to buy now and pay later. You can download and start using the app right away. It offers exclusive deals and discounts to help you save even more money on your purchases, and you can use its financing both in-store and online. You can also earn rewards for multiple uses.

    As long as you make your monthly payment on time, there’s no real cost to worry about. You will need to make a payment at checkout and every two weeks after to pay off the loan in four total payments. Some transactions are eligible for “Pay in 30 days,” which gives you up to 30 days to pay without interest.

    Klarna doesn’t do a credit check when you sign up and only does a soft credit check once you decide to pay in four installments or pay in 30 days.

    Splitit
    • Spending limit: Based on credit card limit
    • Interest rate: 0%
    • Installments/terms: Varies based on retailer and user’s choice
    • Late fees: None from Splitit; credit card fees apply

    With Splitit, you use your existing credit card; you just need the balance available to make the purchase. Splitit puts a hold on your card and reduces the hold amount each month as you make payments. When you check out, you’ll choose the number of monthly payments. You make your first payment at the time of purchase. Splitit works with a variety of online merchants.

    Splitit partners with Visa, Mastercard and Discover and only accepts credit cards, not debit cards. There’s no app; once you make a purchase using Splitit, you receive an email with a link to a portal to see your plan details, check payment dates and update your card information.

    Perpay
    • Spending limit: Based on net income and repayment history
    • Interest rate: 0%
    • Installments/terms: Varies based on user’s choice; payments each payday
    • Late fees: None

    Perpay is a buy now, pay later solution that emphasizes credit building. There’s no credit check requirement, and you can shop with over 1,000 brands using the online marketplace.

    Each person is assigned a personalized spending limit based on net income and repayment history; once you are ready to make a purchase, you check out and submit it for approval. If you’re approved, you choose how many payments to make over time. Payments are deducted starting on your next payday and each payday after.

    Perpay reports your spending limit as a credit line to the three major credit bureaus. Once you complete four months of on-time payments, Perpay starts reporting payment history. To be eligible for Perpay, you need to be employed full time, with three months with your current employer, and receive direct deposit.

    Afterpay
    • Spending limit: Based on credit history, on-time payments and how long you’ve used Afterpay
    • Interest rate: 0%
    • Installments/terms: Four payments over six weeks
    • Late fees: Up to $8

    With Afterpay, you can shop online or in-store and split your purchase into four interest-free payments made every two weeks. You pay 25% at the time of purchase. Afterpay recommends using its app to sign up and shop. You need a debit card or credit card to be eligible. The company may perform a soft credit check when you sign up.

    There are two ways to make payments with Afterpay: automatic payments or manual payments. Afterpay sends payment reminders so you don’t forget about due dates. You can use the app to join the Pulse Rewards program and earn points to get exclusive offers at brands and benefits, including no required upfront payments and delayed payment dates.

    How buy now, pay later apps work

    Most commonly, buy now, pay later apps are used for online purchases (you may be able to use them in-store in some cases). In general, buy now, pay later apps let you make a purchase without paying in full at checkout and then pay for it in equal installments over time. It’s typical to see buy now, payer later options on online retailers’ checkout pages.

    Many buy now, pay later programs are interest-free, so the total amount you pay isn’t greater than the purchase amount unless you make a late payment or have a payment rejected. Payments might be biweekly or monthly, depending on the company.

    Using buy now, pay later could help increase your credit score; some companies report payments to the credit bureaus. On the other hand, late payments could lower your score. Make sure you know the terms of the program and find companies “that actually care about their customers and go out of their way to help,” as a reviewer from Pennsylvania on our site recommends.

    Buy now, pay later pros and cons

    Before you use any financial product, it’s always important to understand the benefits and risks. Buy now, pay later apps can help you finance a purchase, but there are some drawbacks to consider.

    Pros

    • Makes purchases more affordable by spreading out payments
    • No interest charge if you pay on time
    • No hard credit check to qualify
    • Easy to use with fast approval before purchase

    Cons

    • Limits to how much you can spend
    • Fees for late and rejected payments
    • Can hurt credit if you don’t make payments on time
    • Potential for spending more than you can afford to repay

    Buy now, pay later vs. credit cards

    Buy now, pay later companies and credit cards both allow you to make a purchase and pay it off at a later date, but there are important differences.

    With buy now, pay later, you usually owe a small amount upfront (for example, 25% of the purchase amount) and then have six weeks or longer to pay the remaining balance in equal, interest-free installments. You may be able to shop in person, but companies tend to be more oriented toward online merchants. Qualifying for buy now, pay later also doesn’t require a hard credit check.

    Credit cards require a hard credit check and give you a physical card to use anywhere that accepts your card network. Credit cards have revolving limits that allow you to spend and borrow up to a limit, with an interest-free grace period that usually lasts around 21 to 25 days.

    If you don’t pay the full statement period balance on the card after the grace period, you owe interest on the remaining balance. There is a minimum amount due each month.

    Buy now, pay laterCredit card
    Credit check to applySoftHard
    Where you can use itLimited retailers (mainly online)Anywhere in card network
    Interest0%0% for grace period; interest and APR apply after
    Other fees (vary)Late fee, rejected payment feeAnnual fee, late payment fee, foreign transaction fee, balance transfer fee, cash advance fee

    Which is better for you depends on your financial situation and goals. Buy now, pay later might be better if you’re making a larger purchase you know you can pay off over the repayment period. A credit card is probably better for everyday purchases.

    Buy now, pay later gives you a longer time to pay off a purchase at 0% interest, but not all retailers accept it. A credit card can be used at a wider variety of places and lets you pay off a balance at your own pace, but you’ll run into fees more quickly. Credit cards also have better rewards programs and other benefits, like being able to check your credit score.

    Frequently asked questions

    How much does it cost to buy now, pay later?

    The cost of buying now and paying later depends on the offer. With many buy now, pay later services, you pay an initial amount upfront and then make regular payments for a specific period. As long as you make your payments in full and on time, there are no fees. You may incur a fee for a late payment or a rejected payment.

    Can buy now, pay later apps help build credit?

    Some buy now, pay later services, like Perpay, do help you build credit as long as you make payments in full and on time. However, paying late or not making your payment in full could hurt your credit.

    Who is eligible for buy now, pay later programs?

    Eligibility for buy now, pay later varies by company. Most companies have basic requirements, like being 18 and having a working email address and phone number. You may also be required to have a credit card, debit card or regular income. Most companies do a soft credit inquiry to check your credit.

    How do buy now, pay later apps make money?

    Buy now, pay later apps usually make money from the companies they work with rather than the customer. For example, they may charge the store a fee each time a customer shops online or in a store and uses the buy now, pay later option to finance a purchase. Some companies charge fees to the customer, like late fees.

    What are some alternatives to buy now, pay later apps?

    Alternatives to buy now, pay later apps include credit cards with an introductory 0% rate and personal loans that give you a longer time to pay back funds. Some retailers also offer their own interest-free repayment plans.

    Bottom line: When should you use a buy now, pay later app?

    If you want to make a large purchase and don’t want to pay the full amount upfront, a buy now, pay later app can make sense. Buy now, pay later is also a good alternative for borrowers who have difficulty qualifying for a credit card.

    Before you use buy now, pay later, it’s important to be comfortable with the terms of the offer. Understand how much you owe at the time of purchase and how long you have to pay the money back, and make sure your budget can fit each payment. This ensures you can enjoy your purchase while maintaining your financial health.

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