Welcome to your ultimate PayPal Credit review for 2019.
If you've been looking for an interest-low business loan, you probably know your options are pretty limited. These days, it's not exactly easy to get your hands on capital for your company. That's particularly true if you don't have a long history in your chosen marketplace.
Fortunately, PayPal Credit could be here to help.
Since 2016, PayPal Credit has given customers and companies a chance to access extra money to make purchases. In simple terms, this means that your PayPal account can work like a digital credit card. Just like with any credit card, if you pay your balance within the appropriate period, you won't have to pay any interest at all.
If you're making purchases, either for yourself or your business, of over $150, your interest-free period will increase to four months – all you need to do is make your minimum repayments.
So, where's the catch?
Well, PayPal Credit, like any lending opportunity, has its ups and downs.
Read through our PayPal credit review for the behind-the-scenes scoop.
PayPal Credit Review: The Lending Options
Let's start with the basics, what kind of credit can you get from PayPal?
Well, basically, PayPal Credit allows you to buy items now and pay for it later. As long as you spend more than a specific amount, you should be able to pay the money you use back over time, without having to worry about things like interest fees.
Essentially, you can shop anywhere that PayPal is accepted, and you'll get 6 months of financing on any purchase over $99.
The great thing about PayPal Credit is that you're not restricted in what you can use it for. There's no specific purchase that you need to make. You have the freedom to decide where and how you want to use the money.
What's more, all you need to do to avoid any huge expenses is make sure that you pay back whatever you borrow within six months or less.
PayPal Credit Review: Ease of Use
PayPal Credit is designed to be there when you need it most.
If you're approved for your line of credit, then it will be applied automatically to your account. All you need to do is choose “PayPal” when you go through the payment process on a website where PayPal is accepted. From there, you'll have the option to use your existing PayPal balance, or request credit.
PayPal will ask you to answer a couple of questions. You'll need to enter your social security number and your date of birth to accept the terms and conditions of your credit.
Fortunately, you don't have to wait for long to figure out whether you've been approved for your cash or not. PayPal Credit will give you an approval in a matter of seconds.
If you request to pay for something with PayPal Credit and the transaction amount would cause you to go over your limit, the system will also look at whether it can provide a credit limit increase, so that you can continue with your purchase.
PayPal Credit Review: Application
When it comes to applying for quick credit, either for your business or personal life, it doesn't get much simpler than PayPal Credit.
You'll get a decision on whether you've been approved in seconds, and if you are approved, the money goes straight into your account, so you can carry on with any purchases that you need to make in record time.
So, how do you boost your chances of being approved?
Well, first of all, it's best to make sure that you have the highest credit score possible. Any credit provider, even digital brands like PayPal, needs to check your credit before approving you for a loan.
Additionally, you'll need to have a standard PayPal account set up (read our full PayPal review). PayPal accounts are free and easy-to-use, but you can't start applying for credit without one. You may also need to verify your account, which means uploading a piece of government-approved ID.
Once you have your PayPal account set up, you'll need to fill in a short application form. This only takes a few minutes, and it allows PayPal to run an automated credit check too. If you're approved, you'll have your credit limit linked to your account. Usually, PayPal Credit starts you off at $250 to get you started. If you need more money than that, you'll need to request it.
Crucially, while applying for PayPal credit is a relatively smooth and straightforward experience, you can't know for certain whether you're going to be approved before you hand over your detail. This means that once the full check of your credit is completed, if PayPal doesn't accept you, then you'll be left with a black mark on your credit history.
If you've ever tried to apply for credit before, you'll know that the more you're rejected by lenders, the harder it is to get credit cards and other loans in the future.
👉 To improve your chances of getting the loan you need, make sure that you are:
- At least 18 years of age
- A resident of the country you're applying for credit in
- Have an annual and regular income
- Are free of any CCRs or bankruptcies
- Have a reasonably good credit history
PayPal Credit Review: Interest-Free Offers
Currently, PayPal Credit offers the opportunity to borrow $99 or more for 6 months without paying any interest whatsoever. This used to be an offer of $150 for 4 months, but clearly PayPal wanted to give their customers even more freedom when it came to applying for credit.
Crucially, you can still borrow money from PayPal without interest for purchases of under $99 too. You just need to make sure that you've paid your full balance by the payment date on your statement to avoid any charges.
PayPal sends you email reminders when you're due to make a payment, to reduce your chances of accidentally forgetting to pay up.
The 6-month offer for payments over $99 means that you can buy a range of items and pay nothing for them for a while. As long as you've covered the balance within 6 months, then all you need to do is make minimum monthly repayments, and you can avoid interest.
Usually, your minimum payments will be around 1% of your outstanding balance per month, or $5 (depending on what's higher).
If you're buying crucial materials for your company, PayPal Credit is a great way to spread some costs – particularly for smaller businesses. However, it's worth noting that the variable purchase APR for people who don't pay what they owe within 6 months is huge. You can expect an APR of 26.24%!
The national average for APR rates reached an all-time high in 2018 of 16.71%. However, PayPal Credit's fees are even higher than that.
There's also a risk that if you fail to pay what you owe on time, PayPal Credit will charge you late fees too, which makes borrowing from the online transaction brand even more expensive.
PayPal Credit Review: Managing PayPal Credit
Managing and using PayPal Credit is very similar to having a store-based credit card. If you've ever used credit to pay from an item from a vendor, and paid off what you owed over time, then you'll know what this feels like.
The main difference is that with store credit, you'd have to go through a credit check and fill out an application from every store you want to buy from. On top of that, there's the stress of having to keep several payment strategies in mind. With PayPal Credit, you have the freedom to shop anywhere that PayPal is accepted. These days, it's tough to find many significant companies that don't take PayPal as a form of payment.
Additionally, it's worth noting that PayPal does help you with managing and using your credit in several different ways.
👉 For example:
- Purchase protection: You can get a refund for your item if you think it doesn't match the description provided or it doesn't arrive as and when it's supposed to.
- Return shipping: If you're unhappy with your order, PayPal can sometimes refund the cost associated with sending that item back.
- One-tap checkout: You'll be able to complete your transactions with just a touch – making your fast-paced life a little easier.
Additionally, like any credit card or loan, PayPal provides monthly statements on your line of credit too, so you can check how close you are to paying off whatever you owe.
PayPal Credit Review: The Fine Print
The fine print on a credit or loan solution is vital to consider whenever you're borrowing money. Whether you're accessing credit for personal and business reasons, it's worth being aware of any hidden fees that might come your way.
One good bit of news is that there isn't any annual fee if you want to use your line of credit with PayPal. However, you will need to pay late charges if you miss payments when you're supposed to. You can pay anywhere up to $35 for every missed payments – so it's essential to be vigilant.
Another point to keep in mind is that the PayPal interest rate is variable. That means that the one you get when you apply might not be the same as the interest rate we've written here. Sometimes, you may start with a lower promotional price before the standard APR kicks in.
Interestingly, PayPal Credit does give you the option to use your credit to send money – although we wouldn't recommend using this solution.
Remember, if you don't think that you're going to have the money you need to pay off whatever you owe within the financing period, you'll usually be better off with a low-interest credit card. While PayPal Credit offers a good deal for some smaller business making small purchases – it does have some hefty interest rates to consider if you can't take advantage of the interest-free offer.
PayPal Credit Review: Making Payments
The best thing you can do to get the most out of your PayPal Credit experience is ensure that you're making your payments on time.
Fortunately, PayPal will send you reminders over email to ensure that you're more likely to do this. When you get your reminder, you'll have two ways to make your payments. Your first option is to make a simple one-off payment at any time by contacting the PayPal Customer Service team.
The easier option, in our opinion, is to set up direct payments each month. This will help you to pay whatever you owe in reasonable installments, without having to worry about going over your free interest period. Remember, you'll need to pay at least the monthly minimum each month, but you also need to get rid of your full balance before the 6 months is up.
Although most people will start with a limit of $250 to borrow on their payments, there's a chance that you can apply for more than this. It's possible to get around $1200 in credit depending on your income and your credit rating.
PayPal Credit Review: Is It Better Than a Credit Card?
So, is PayPal Credit better than just using a standard credit card?
Well, that depends.
One of the biggest benefits of PayPal Credit is that it allows you to make online purchases very quickly. You don't need a physical card that you have to take with you and swipe at local stores. PayPal's Credit option is specifically designed for people who conduct most of their transactions online.
What's more, PayPal Credit may be safer than using a conventional credit card. The technology used to process payments by PayPal obscures your personal information, which means it's very unlikely that anyone will be able to gain access to your finances.
Rather than having to plug your business credit card or personal debit card information into a site that may or may not be secure, you're using a third-party payment processor. This offers an additional layer of security that may be able to protect you against theft and fraud.
Additionally, PayPal Credit has that incredible 6 months offer that allows you to make your purchases without having to worry about any interest payments. It's challenging to find the same kind of offer online without having to jump through numerous hoops – particularly if you're looking for basic funding options for your business.
Unfortunately, PayPal Credit has some downsides too. There are no reward points that you can put towards your everyday spending or airline miles as you can get with some standard credit cards. Additionally, while most credit cards have relatively high APR rates, PayPal's interest fees may still be higher than most.
PayPal Credit Pros and Cons
- Instant access to credit when you need it most
- Simple and quick credit-based shopping online
- Fantastic 0% interest for 6 months if you spend more than $99
- A convenient method of shopping as PayPal is accepted by many brands
- You can spread the cost of big purchases over a schedule that suits you
- Payment reminders will help you to avoid missing payments
- Direct debits are available to automate your repayments
- PayPal Credit uses advanced protection and encryption to help defend your data
- You can manage your PayPal Credit account anywhere, even from your smartphone
- Getting support from the PayPal team isn't always easy
- You'll end up with a mark on your record if you're not approved for credit
- You won't get any reward points with your purchases
- The interest rates are quite high if you go over the interest-free period
PayPal Credit Verdict: Is It Right For You?
If you're looking for a quick and easy way to access extra money for personal or business expenses, then PayPal Credit may be a great choice. It's incredibly easy to make purchases on the PayPal Credit system, and you have the freedom to shop with countless major retailers too.
However, it's also worth noting that PayPal Credit isn't perfect. The interest rates are quite high if you don't pay what you owe within the designated period. Additionally, the fact that you can make purchases in a single click might not be a good thing for people who tend to over-spend.
PayPal Credit is best for people who need to do a lot of shopping online and want to spread the costs of their purchases out over a schedule that they can manage more effectively. Like any line of credit, you'll need to use PayPal Credit carefully to protect your finances. However, if you have the right strategy in place to make your repayments, PayPal Credit could be a quick and easy way to borrow money without having to pay excessive interest rates.
Have you tried using PayPal Credit yet? Let us know how you found the experience in the comments below, or join the discussion with us on social media.