Affirm vs Klarna: Battle of the BNPL Services

Which is the Best Buy Now Pay Later Service?

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Making the choice between Affirm vs Klarna can be a struggle. Both of these Buy Now, Pay Later services are extremely popular, thanks to their ease-of-use, convenient sign up, and the growing demand for flexible payment options.

Currently, the global buy now, pay later market is growing at a phenomenal pace, thanks in part to the rapid increase of people looking for help with their finances. The pandemic led to a number of economic and financial issues for people all around the world, making an interest-free payment service particularly compelling.

The question is, with so many buy now pay later services to choose from, how do you know which is best? Here’s your guide to Affirm vs Klarna.

Affirm vs Klarna: An Introduction

Affirm and Klarna are both Buy Now Pay Later services. They give users a simple way to pay for a larger item or purchase up-front with a percentage of the overall cost. Over time, the customer pays for the remaining balance of the purchase using weekly instalments.

What is Affirm?

affirm homepage - affirm vs klarna

Affirm is one of the better-known tools for buy now pay later services. It works by giving people a simple way to pay for items either in four interest-free payments, or via monthly transactions. The experience is similar to using a credit card to pay for what you need, though you do pay a portion of the cost up-front, and if you pay on-time, you shouldn’t have any interest rates to worry about.

What is Klarna?

klarna homepage - affirm vs klarna

Klarna works in a very similar way. One of the first and most popular tools for Buy Now Pay Later services, Klarna partners with retailers around the world, so you can shop directly with their website, or you can shop on the Klarna app.

Klarna offers either an option to pay in 3 instalments, or in 30 days. The company works with some of the biggest brands in the world to help customers get the right products.

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Affirm vs Klarna: How They Work

The good news for people in search of a simple financial solution, is both using Affirm and Klarna is extremely straightforward. With Affirm, you’ll download an app to your phone, and use the solution to visit stores and purchase the items you want from your favourite locations. You can choose the Affirm option at the checkout to pay for items on a monthly basis, or in a series of transactions, depending on your individual needs. Affirm also offers loans, which can be ideal if you need to make particularly large purchases.

How does Affirm Work?

Affirm is popular with a huge selection of merchants. Many companies have already implemented the technology into their checkout, so you can simply choose the payment option when you’re there. However, you will be able to download the browser extension if you’re having trouble finding the Affirm checkout button.

How does Klarna Work?

Klarna is one of the better-known choices for Buy Now Pay Later services. Launching in 2005, the company introduced a lot of people to this kind of financing. Since then, Klarna has become one of the world’s top online payment and shopping services.

Klarna is available on many of the top stores from across the globe, and it’s something many shoppers use on a regular basis. The company makes it quick and easy to split your transactions into three payments, instead of asking you to pay for everything up front.

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Affirm vs Klarna: Credit Requirements

Credit can be a problem for anyone in a difficult financial position. Unfortunately, because you are essentially borrowing money from both Affirm and Klarna, there’s always a chance your credit score could play a part in your ability to use the services.

Affirm will use a soft credit check to determine whether you’re qualified to borrow money from them. The good think about a soft credit check is it shouldn’t have any long-term impact on your credit score. However, there’s a risk you may have delinquent payments reported to Experian, along with any loans you choose to take part in.

Affirm won’t report loans of 0%, with included bi-weekly payments. You also won’t need to worry about your credit report if you’re only offered a single option of a three-month payment with 0% interest. Klarna takes a very similar approach to credit.

Klarna will perform a soft credit check too, which shouldn’t leave any kind of mark on your score. However, if you don’t pay back what you owe on time, or you find yourself needing to borrow money for longer than expected, you could end up with a mark on your report. It’s best to keep a close eye on your payments to ensure you’re doing everything correctly.

Both Klarna and Affirm will ask you to fill out a small form when you sign up for an account, where you’ll be asked for basic details about yourself. You may need to prove your identity to both loan providers, so be prepared to be asked for ID in some cases.

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Affirm vs Klarna: Interest and Fees

Affirm and Klarna will both give you an opportunity to access interest-free money, which is why these solutions are often so much more popular than credit cards and loans. However, you will need to make sure you follow the terms and conditions provided when you sign up for the loan/borrowing period. This means paying everything you owe on time.

If you’re late in repaying what you owe, there will be fees to pay. Klarna charges between $7 and $35 per month for every missed month of repayments. You’ll also have to pay a lot more if you’re using the 3-36 month financing option or larger payments. Standard purchases begin with a rate of 19.99% and increase to 24.99% based on the length of your financing.

Affirm offers loans with interest rates which can range from 0% to 30%. According to Affirm’s help center, there are no late fees. You can simply schedule your installment payment as soon as you’re able to pay it. This sets Affirm apart from other buy now pay later options like Afterpay, Klarna, and Peloton.

Affirm vs Klarna: Mobile app

With both Affirm and Klarna, you can shop either through a mobile app or online, as you would normally. On the mobile app, you can perform various activities like viewing your purchase history, tracking deliveries, seeing your payments, and updating your payment methods.

Klarna’s app is available on both Android and Apple. Within the app, you’ll find exclusive discounts and deals from over 200,000 retailers for Klarna’s users. The good news is that if an online or offline retailer doesn’t offer Klarna, you can also create a virtual card. These cars are even available to use offline at stores like Walmart, or online via Shopify and Amazon stores.

Klarna’s app has a free rewards club, so you can earn cashback on your purchases. There’s also access to automatic price drop alerts, so you can see when the items on your wish list are cheaper. Sharing your wish list with family and friends can even help them decide what to put on layaway for Christmas and birthday presents.

The Affirm app is similar in a lot of ways to the tools available from Klarna. You’ll be able to access the app on both Android and Apple, and shop with short term credit from more than 12000 merchants. You’ll also be able to shop in-store or online.

Both buy now and pay later apps will give you insights into loan options with monthly payments. You can also find exclusive offers with low financing fees and interest rates of 0%. Affirm’s app also allows users to open high-yield savings accounts with no fees or minimums. This could be ideal for a lot of younger customers looking for online savings accounts.

Online banking and savings products are becoming increasingly popular as they can be very easy to use, and often offer better interest and deals than most offline banks. It’s worth checking Affirm and it’s unique savings account (complete with dedicated debit card) out if you want to start saving online.

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Other Products from Klarna and Affirm

As lenders for the millennial generation and modern shoppers, Klarna and Affirm offer a simple way to shop online without interest, and sometimes without the risk of late payment fees.

If you have specific borrowing needs, Affirm and Klarna will both allow you to pay back what you owe in different ways. Klarna has the “pay in 30 days” offering, or you can choose 6 to 36 month financing. There are no interest charges on the pay in 30 days loans.

The balance of your loan is automatically charged to your credit or bank account 30 days out of your purchase data. Alternatively, if the interest-free installment options aren’t right for you, the loans for up to 36 months start with interest rates of around 19.99%. These may affect your credit history.

Both products offer a virtual card, so you can make your first payment with Klarna or Affirm at any checkout with a virtual solution that works similarly to a credit or debit card. These tools work at most US stores, and will allow you to pay for your transactions as normal, then use the Klarna and Affirm payment plan.

Your purchases will not require a hard credit check when using a virtual card with an offline or online store, and you’ll still pay 25% upfront.

One unique option offered by Affirm is their savings account. The savings account is high-yield and FDIC insured. Plus, there are no fees, and no minimum balance to worry about. The interest rates you can access can vary over time, but the average is usually a little higher than the standard you might expect from other savings and bank accounts.

Affirm also has a “Debit+” card, which connects to your savings. There’s also no impact on your credit, because you’re accessing a debit card, rather than a credit card.

Affirm vs Klarna: Which is Best?

In a world of PayPal and eCommerce, digital tools for financing are becoming increasingly popular. Tools like Klarna and Affirm can give you access to the money you need to make important purchases, and they don’t need to charge interest like most loans and credit card options.

With Affirm and Klarna, you can easily purchase products, test them, and get refunds before you have to pay for anything. You’ll also have more freedom to spread the cost of your purchases out over time, so you don’t have to worry as much about your personal finance.

With both Affirm and Klarna there is no need to worry about unexpected fees and interest. While Affirm offers a few more innovative products, like a savings account and dedicated debit card, Klarna is available from a wider selection of retailers at the moment. It’s also worth noting, however, that Affirm charges no late fees if you’re behind on your payments.

Rebekah Carter

Rebekah Carter is an experienced content creator, news reporter, and blogger specializing in marketing, business development, and technology. Her expertise covers everything from artificial intelligence to email marketing software and extended reality devices. When she’s not writing, Rebekah spends most of her time reading, exploring the great outdoors, and gaming.

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