Buy Now Pay Later
Vault Verified
Expert take
Afterpay offers an interest-free way to pay for short-term purchases. This buy now, pay later (BNPL) service is available online and in-store. It’s an enticing alternative to credit cards, which often charge interest, but you can still rack up fees with Afterpay if your payment is late.
Pros
- Offers interest-free financing
- Move one payment per order to a different due date
- Soft credit check
Cons
- Charges late fees
- On-time payments not reported to credit bureaus
- Not all payments can be rescheduled
Vault’s Viewpoint on Afterpay
Afterpay BNPL allows you to make four interest-free, equal payments over six weeks, with the first payment due at checkout. For instance, on a $100 purchase, the first $25 is due at checkout. The remaining three $25 payments are due in two-week intervals. Your order is fully paid after making the fourth payment. A late fee might apply if Pay in 4 plan payments are received 10 days past their due date. Late fees are up to $8 each instance. The total fee cap per order is 25% of the order value.
You can also choose a monthly payment plan of six or 12 months. Its monthly plan option offers an APR of 0% to 35.99%. While its monthly payment plan might charge interest, it doesn’t charge late fees. This makes it a good low-fee option for those who want monthly financing.
Afterpay is available anywhere Apple Pay or Google Pay are accepted, online or in-store. Its simple and reasonable fee structure, and widespread availability, make it one of the best BNPL services available today. Still, it’s important to make Afterpay payments on time.
About Afterpay
Afterpay was founded in 2014 in Sydney, Australia and has quickly grown into a company with millions of global customers and hundreds of thousands of merchants. Today, Afterpay has customers in Australia, New Zealand, the U.S., Canada and the U.K. In the U.K., the company is called Clearpay.
Afterpay notes that its service is free for customers who pay on time — it doesn’t charge interest, and paying on time lets you avoid late fees. This can provide financial flexibility and increased spending power without interest or unnecessary fees. It also notes that while it may charge late fees, they’re capped to a percentage of the order value.
Afterpay is available at most stores in the U.S., including popular brands like Finish Line, Urban Outfitters and Nordstrom. To see where you can shop with Afterpay, browse the in-store tab in the Afterpay app to see participating stores nearby. The in-store tab also shows your pre-approved limit, determining how much you can spend with Afterpay.
| Loan Amount | Varies |
| Fees | Late fees up to $8, aggregate 25% of the order value per order |
| Minimum Credit Score | N/A |
| Repayment Schedule | Four payments over six weeks |
| Funding Speed | Within seconds |
| APR | N/A |
| Loan Availability | Subject to a soft credit check |
Who Should Get a Personal Loan With Afterpay?
You should get a personal loan with Afterpay if you want to split your purchases into multiple payments without interest. Remember that late fees of up to $8 may apply, so Afterpay is best if you can reliably pay their installments on time.
You should also consider Afterpay if you have a good or excellent credit score and a positive repayment history. While Afterpay only runs a soft credit check for its Pay-in-4 plan, a stronger score may improve your chances of approval. Failure to pay is reported to credit bureaus which could damage your credit. Afterpay is best for those who haven’t had trouble managing loans in the past.
Who Should Consider an Alternative Personal Loan to Afterpay?
You may want to avoid an Afterpay personal loan if you have bad credit or struggled with managing debt in the past. Adverse credit reduces your likelihood of approval. And if you’re unable to repay your Pay-in-4 plan, you might incur late fees that add up.
BNPL services tempt you to spend more money on nonessential purchases, it may be best to steer clear. Some alternatives to BNPL services include:
- 0% intro APR credit card
- Fixed-rate personal loan
- Emergency loans
Before signing up for a loan with Afterpay, be clear on the loan’s terms and fees that might apply. BNPL services aren’t for everyone; only sign up if you can manage your loan responsibly to avoid falling deeper into debt.
Getting a Personal Loan Through Afterpay
Afterpay doesn’t offer traditional personal loans. Instead, it partners with First Electronic Bank to offer a Pay Monthly plan. This plan lets you split your purchases into six or 12 monthly payments, with interest.
How to Qualify for a Line of Credit With Afterpay
Whether you want to use the Pay Monthly or the Pay-in-4 option, qualifying for a line of credit with Afterpay has similar requirements. Here are the requirements you must meet:
- Be a U.S. citizen
- Live in one of the 50 U.S. states or D.C.
- Be 18 years old or the age of majority in your state
- Be capable of entering a legally binding contract
- Have a valid email address and phone number
- Provide a valid U.S. mailing address
- Be authorized to use a U.S.-issued checking account, or credit or debit card for purchases
Note that these are just general restrictions, and as mentioned, Afterpay may perform a soft credit check for new customers. Individual merchants may have their own requirements and restrictions to determine which customers can use Afterpay for purchases.
How to Apply for a Line of Credit With Afterpay
Applying for a line of credit with Afterpay follows a simple process that typically only takes a few minutes. Here’s how to sign up:
- Download the Afterpay mobile app, available on Android and iOS
- Shop and checkout through the app, or in-store using the Afterpay card
- During checkout, choose Afterpay as your payment method
- If it’s your first time using Afterpay, provide payment details to complete your purchase
- Review and accept the payment terms
- Finish setting up your account in the app or on www.afterpay.com.
You can finish setting up your account after checking out. But using Afterpay in-store requires advanced planning. You’ll need to download the app, create an Afterpay account and add the Afterpay card to your device’s digital wallet to pay.
How Does Afterpay Stack Up to Its Competitors?
“Afterpay’s plans and features closely mirror that of its competitors. When choosing whether Afterpay is right for you, compare details like fees and credit check requirements to determine if Afterpay is a fit.”
— Jennifer Coates Calonia
Here’s how Afterpay stacks up to three top competitors:
Afterpay vs. Affirm
Afterpay and Affirm are similar in many ways, with both offering interest-free, four-installment payment plans, and a longer monthly payment option. One of the biggest differences is that Affirm never charges late fees, while Afterpay may charge late fees on its Pay-in-4 plans.
Affirm and Afterpay have similar monthly payment options, with both offering six- and 12-month payment plans. The APR is also similar, with Affirm charging 0% to 36% and Afterpay charging 0% to 35.99%.
Both Affirm and Afterpay may run a soft credit check for BNPL applicants, but they might not report this activity to credit reporting agencies. But if you opt for monthly financing, Affirm might report new loans to credit bureaus. Afterpay doesn’t report late payments to credit agencies, but might restrict your access to new Afterpay purchases. Check your loan terms for clarification.
Afterpay vs. PayPal
Afterpay and PayPal both offer Pay-in-4 plans in addition to monthly financing. Both let you split your purchases into four interest-free payments over six weeks with no interest or fees. Similarly, neither charges fees—but they do charge interest—on their monthly financing plan.
One of the main differences between the two is where and how you can pay. While Afterpay is available both in-store and online, PayPal is only available online. Although many merchants accept PayPal, this limits its usefulness for those who frequently shop in-store.
Like Afterpay, PayPal might be a soft credit check if you sign up for PayPal Pay in 4 or Pay Monthly. Similarly, PayPal may report Pay Monthly activity to credit bureaus. While a soft credit check likely won’t affect your credit, monthly financing is more likely to have an impact.
Afterpay vs. Zip Buy Now Pay Later
Although Zip currently doesn’t offer monthly financing, its BNPL product is similar to Afterpay and the other competitors. That includes a Pay-in-4 plan with no interest if you pay on time. But Zip Buy Now Pay Later has an installment fee of up to $7.50 per order. In addition, it may charge late fees of up to $7 per order.
Because Zip only offers BNPL and not monthly financing, it only performs a soft credit check. This also means it can’t help build credit, unlike Affirm’s Pay Monthly plan.
One strong point for Zip is that you can use it online and in person. That makes it more versatile than competitors like PayPal’s Pay in 4, which can only be used online. Still, it isn’t as useful as Afterpay, which has more flexible plan options.
Frequently Asked Questions
How Trustworthy is Afterpay?
Afterpay’s trustworthiness is a bit of a mixed bag. It partners with First Electronic Bank, an FDIC-insured bank, for its Pay Monthly program. It has an excellent 4.8/5 score on Trustpilot with over 192,000 reviews. While it has an A-rating with the Better Business Bureau, the business is not BBB-accredited and its average customer review is a paltry 1.14/5. Customers complain of a lack of follow-up from customer service, inconsistent lending practices and not receiving their orders in a timely fashion.
Is There a Downside to Using Afterpay?
Afterpay can be a valuable tool for splitting purchases into more manageable installments, but there can be downsides. For instance, while Afterpay doesn’t charge interest for Pay in 4, it may charge late fees if your payment is late. BNPL services also can create a temptation to overspend, as many retailers offer them on a wide variety of products.
Will Afterpay Affect My Credit?
Afterpay’s buy now, pay later service generally won’t affect your credit because the company only performs a soft credit inquiry for BNPL customers. However, it may perform a hard credit inquiry for its Pay Monthly service and report payment activity to credit bureaus. Using loan products responsibly is always best to avoid damage to your credit history and score.
