Affirm Review 2022: Are Buy Now Pay Later Services Right For You?
Posted On January 15, 2022
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Affirm is a US-based Buy Now, Pay Later fintech that allows customers to split purchases into monthly payments with interest rates between 0 – 30%
The Key Takeaway: Financing purchases through Affirm is an excellent way to spread out the cost of purchases if you are approved for 0% interest. Alternatively, suppose you are approved for financing with interest. In that case, this is an advantageous way to avoid revolving consumer debt since you know the total amount you will pay upfront.
I am always apprehensive about paying any interest, so knowing the total cost upfront is essential.
I’ve used Affirm twice – Once to finance a set of west elm chairs and another time financing a set of dining chairs. Overall, I am pleased with their services. Both times I was approved with 0% interest.
Pros & Cons
✔ 0% APR for qualified applicants
X APR as high as 30%
✔ No late fees
X On-time payment history do not always impact your credit score
✔ Purchasing power up to $17,500
X Downpayment may be required (10 -50%) of the purchase cost
Customers can split purchases into monthly payment plans – 3, 6, 12 month options
Loans from $50 – $17,500
No hard credit checks
APR ranges from 0 – 30% depending creditworthiness and where you are shopping
No late fees or prepayment fees
You will know exactly how much you are paying at checkout
Who Should Use Affirm?
Affirm is a good option for:
Offered 0% percent financing through Affirm
You do not qualify or necessarily want a credit card
Looking to responsibility fund a large purchase and know how much you will pay upfront
Affirm is not a good option for:
People looking to build their credit
You are looking to finance everyday purchases
You have poor credit history and trouble making on time payments
What Is Affirm?
Affirm is a San Francisco-based publicly traded financial technology company founded in 2012 by Max Levchin, the co-founder of PayPal.
The company allows customers to split purchases into multiple payments with APRs ranging from 0%-30% depending on the customer. The company also offers an FDIC high yield savings account.
Affirm is accepted by 29,000 retailers worldwide and has 7.1 million active customers.
How Does Affirm Work?
Affirm allows its customers to split purchases made at its partner stores into monthly payment plans, usually 3, 6, or 12-month plans.
Depending on your creditworthiness and where you are shopping, your APR can range from 0% – 30%, with purchasing power up to $17,500 for qualified applicants.
In other words, you may see some merchants offer 0% APR with a payback schedule of 6, 12, or 24 months, while other merchants do not have a special APR and a payback schedule of 3, 6, or 12 months.
Affirm also offers 4 interest-free payment plans depending on the merchant and the order value, paid every two weeks.
Affirm negotiates loan eligibility and criteria individually, so there’s no way to tell where you will and will not be approved with favorable terms or approved at all.
Payments are due 1 month after the purchase processing date and on the same day in the subsequent month.
There are no prepayment or late fees. However, Affirm may report delinquencies to the credit bureaus.
Choose Affirm at checkout and apply for your loan right then
Choose your repayment plan per the options available.
Does Affirm Approve Every Purchase?
While no minimum credit score is required for approvals, Affirm does not guarantee Approval. Affirm considers a variety of factors, including:
Payment history with Affirm
How long you have had an Affirm account
Affirm negotiates loan eligibility and criteria individually, so there’s no way to tell where you will and will not be approved with favorable terms or approved at all. You may be approved at some merchants but not at others.
What’s The Downside To Using Affirm?
Affirm loans can be as high as 30%, not a minor detail. Affirm does not necessarily report payment and history information to credit agencies, unlike a revolving credit card. Furthermore, you may not be approved to purchase at all retailers as Affirm negotiated has different approval standards for each retailer.
So if you are looking for a build credit, an introductory credit card may be a better option.
Frequently Asked Questions
Is Affirm Legit?
Yes, Affirm is legit. Affirm is a public company that trades on the NASDAQ under the ticker AFRM.
Who Accepts Affirm?
Affirm is accepted at major retailers such as BestBuy, Peloton, Walmart, and Adidas, to name a few. Affirm is accepted at 29,000 retailers worldwide.
Who Can Use Affirm?
The minimum age to create an account is 18. However, according to its website, you need to be 19 years old if you live in Alabama or if you’re a ward of the state in Nebraska.
Does Affirm Check Your Credit?
Affirm does a soft credit check which means applying for a loan does not impact your credit score.
Does Affirm Affect Your Credit?
There are certain types of loans Affirm does not report to Experian. For instance, Affirm will not report a loan to Experian if the loan is 0% and 4 biweekly payments, or if you were only offered one option at the application of a three-month payment term with 0%.
For other types of loans, Affirm may report your payment history to Experian. Affirm may report loans with delinquent payments, which could impact your credit.
Does Affirm Build Your Credit?
Financing through Affirm may build your credit. According to the company, they may report some, but not all activity with the company, unlike a credit card which reports all activity. So, if you are making on-time payments, it may help make positive impact on your score.
Is Affirm Safe?
Yes, Affirm is safe. Affirm meets all industry standards for the protection of personal information. Afterpay’s policies protect the collection, use, and disclosure of information. Affirm uses a variety of methods to keep data and its network safe.
Data Security According to Affirm, when personal information is shared, “it’s transferred with TLS, a cryptographic protocol and then stored with AES 128-bit or higher encryption at rest.”
Restricted Access Affirm stores encryption keys at an off-site facility. “Access to your data requires multi-factor authentication and is restricted to authorized personnel performing specific tasks at your request” according to their website.
How Does Affirm Make Money?
Retailers pay Affirm a commission every time a customer purchases them. Additionally, some shoppers pay interest on their purchases.
Additionally, when financing purchases through Affirm, retailers are exposed to a new class of shoppers who may not have been able to spend due to lack of available credit, e.g., not being approved for a credit card.
Alternatives To Affirm
An endless number of Buy Now Pay Later firms to appear seemingly weekly.
Klarna (Allows customers 3 methods of financing including interest-free financing.)
Afterpay (Allows customers to split into 4 interest-free payments for purchases as small as $10). The average purchase size using Afterpay is $150. They do not charge interest, but have late fees. Each purchase must be approved.
Sezzle (Online only BNPL, available in the U.S. and Canada. Offers credit building through its Sezzle Up option).
The Bottom Line: Is Affirm Worth Using?
I am always apprehensive about making purchases when any interest charges are involved. However, I see value in purchasing without going through the hassle of a hard credit check and applying for a revolving credit card. To that end, you may be giving to credit-building activities as Affirm does not necessarily report all payment history to credit bureaus.
Affirm certainly has a time and place for usage – which would be for one-off purchases, perhaps for a birthday or holiday gift. I do not think it should be used for daily purchases. But I do find solace that you know up-front how much interest you will be paying which makes the cost appear more “real.”
Have you used Affirm or any other Buy Now Pay Later services? Comment below and let the RWPF audience know your thoughts.
Founder and author of realworldpersonalfinance.com [RWPF]. A blog dedicated to personal finance for millennials that want its readers to know they can be perfectly imperfect. There have been mistakes along the way, and he is still learning too. He's dedicated to offering honest opinions and real insight based on his personal experiences.
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