Affirm can provide fast funding for purchases made both online and in-store
Max Levchin, a co-founder of Paypal, established the company that would later be known as Affirm in 2012. These days, virtually every place does it, giving you a choice to divide the payment for your purchase into numerous installments that you may make at different times throughout time.
In addition to this, business is thriving. Compared to the previous year's second quarter (2021), revenue increased by 55%. Because Affirm is designed to be speedy and uncomplicated, it is in your best interest to be sure that you are not overpaying for the convenience it provides in higher fees.
How exactly does Affirm do its job?
Affirm provides several services, including a savings account and a debit card that will be made available in the foreseeable future. Buy-now-pay-later loans are the company's primary source of revenue, and customers can apply for one whenever they make a purchase online. It forms direct partnerships with stores to personalize the available lending alternatives, which can vary from merchant to merchant.
Suppose you choose the Affirm payment option throughout the checkout process. In that case, Affirm will review your credit history, the history of payments you've made through Affirm, and other variables before deciding whether or not to grant you a loan.
If you are accepted, you will choose between several different plans. This will depend on how much you are purchasing. You will have the option to pay for the item in as little as one month or as long as 48 months, although three, six, or 12 months are the most frequent payment schedules.
After you have determined which payment option is suitable for you, the retailer will send your purchase to you. You will make the necessary payments over several months (in most cases). It's almost like a reverse layaway plan if you think about it. Suppose you pay for an item using Affirm. In that case, you will pay the seller in full immediately after your transaction. You will be able to receive your purchase in the same manner as if you had paid with a credit or debit card.
Although the amount you can borrow through Affirm is subject to change based on the merchant, the standard minimum purchase amount is $50. There is a possibility that you could borrow up to $17,500. However, the maximum amount also fluctuates according to the retailer.
Is there a cap on the credit?
There is no predetermined credit limit for using Affirm. Instead, the company will determine your eligibility and the maximum loan amount on a case-by-case basis. They will consider your credit score, your history of making payments on Affirm loans in the past, and your ability to make payments. This indicates that, depending on your circumstances, you can be authorized for more than one loan at a time.
By making on-time payments toward your existing Affirm loans and trying to improve your credit score, you can improve your chances of being approved for additional Affirm loans in the future.
Does using Affirm have any impact on my credit score?
The simple answer is that yes, Affirm does impact your credit score. Your credit score can be impacted by the payment method for your account.
In most cases, Affirm will only disclose your payment history to one of the major credit bureaus – Experian. Nevertheless, there are a few cases in which it won't:
- You are making payments on a loan for four months and have an annual percentage rate of 0%.
- You were only given one choice during the checkout process: a loan for three months with an APR of 0%.
This rule has no exceptions: Affirm will always report late payments to Experian. If you make on-time payments in either of the two scenarios described above, you won't receive any credit; nonetheless, Affirm will record late payments.
What is the minimum credit score required to use Affirm?
Affirm does not reveal the minimum credit score required to be approved for a loan. However, the general rule is that your chances of being authorized will increase in proportion to the quality of your credit score. It's possible that your application for a loan was turned down for reasons that have nothing to do with your credit score.
Do you have to pay interest with Affirm?
Affirm's interest rates can range from 0% to 30% annual percentage rate (APR).
Since it negotiates the terms of each loan separately with each retailer, Affirm can offer a variety of loans with 0% interest. Some retailers may be more likely to provide loans with 0% interest merely to encourage customers to buy their products. To obtain an interest-free loan, you can be required to fulfill several additional conditions despite this.
At any moment, you have the option of paying off your debt in full or making additional payments toward it. If you do that, you will save money since the interest that accumulates on a smaller balance will do so at a slower rate.
Is it safe to use Affirm?
Buy-now-pay-later retailers such as Affirm, on the other hand, do not typically provide customers with the same level of safeguards as credit cards. You do not have protection against fraud with zero liability, nor do you have the insurance-like features that many credit cards offer.
Because of how easy it is to use them, you could feel compelled to purchase more than you require. In contrast, applying for a traditional personal loan involves going through a more organized process that compels you to consider whether or not you genuinely require the borrowed funds. Lenders who provide "buy now, pay later" options get rid of that roadblock.
You may also be able to sign up for many loans at the same time through Affirm, and each of these loans may have a different date upon which the payments are due. Because it is not possible to consolidate all of them into a single loan, handling several Affirm loans can get rather cumbersome.
Who are some of the retailers that use Affirm?
Affirm's ability to be incorporated into the checkout process at a wide variety of retailers — more than 7,900 of them, to be exact — represents one of the company's key strengths. The following are some examples of online merchants who have formed partnerships with Affirm to be able to offer loans to their customers:
- Pottery Barn
- Walmart
- Peloton
- Adidas
- Dyson
- Best Buy
- Expedia
- Nike
How to make online purchases with Affirm?
When you shop online, you can use Affirm money in a few different ways, including the following:
- Partner retailers: Affirm partners with a large number of shops. This means that you can add items to your shopping cart and then request a loan from Affirm as you are checking out.
- Affirm website: If you go to the website of Affirm, you will be able to quickly and easily locate Affirm partner retailers.
- Affirm app: Another option to identify Affirm partner retailers is by doing your shopping through the Affirm app.
- Affirm virtual card: On the Affirm website, you can apply for an Affirm loan for virtually any merchant, regardless of whether or not they are a partner retailer. In the case that your application is successful, you will be issued a virtual card that functions exactly like a credit card number. This virtual card will allow you to make payments for anything up to the maximum of your loan.
How to make offline purchases with Affirm in stores?
You can use the funds from an Affirm loan to make purchases at traditional brick-and-mortar establishments. You'll need to apply for an Affirm virtual card when it launches. After that, you can add funds to this card with Apple Pay or Google Pay on your smartphone and then use it to make payments in person.
How does the process of returning an item work when using Affirm?
Suppose you are not satisfied with your purchase. In that case, you can return the item and have the merchant apply your refund amount to the remaining balance on your Affirm loan. Both of the following are possibilities, depending on the store's policy and how much money you still owe:
- The retailer will only reimburse a fraction of the total price: In this scenario, you may still have an outstanding balance with Affirm. You will still need to pay this off even though you no longer have the product in your possession. Your payments will remain the same amount, but you will have fewer of them, and your last payment could be for a lower sum than is typical.
- The retailer will refund the entire amount: In this scenario, you have a chance of recovering more money than you still owe on your Affirm loan. After that, your account balance will be wiped clean by Affirm. The retailer will refund any excess payment to the method you initially used for payment or through check.
How can I pay off the balance on my Affirm account?
You can either set up automatic payments or make payments manually. You will need to log into your online Affirm account or plan payment through the Affirm mobile app to make a manual payment. You can choose to make your payments in a number of different ways, including the following:
- Debit card
- Check
- Bank account transfer
- Credit card (only in some cases)
Frequently Asked Questions (FAQs)
Can I use Affirm to pay my bills instead of a check?
No, you cannot use Affirm to pay your bills instead of a check. Due to the terms and conditions of using Affirm, you are not permitted to utilize an Affirm loan to pay off other debts, such as your credit card payment. You also cannot use Affirm to pay for your utilities or any other payments that you may have.
Does Affirm verify my credit score before approving my loan?
Yes, Affirm does verify your credit score before approving your loan. When you apply for a loan with Affirm, they will do a credit check on you. Due to the fact that Affirm negotiates on an individual basis with each retailer to offer Affirm loans, the qualifying conditions may also vary from merchant to merchant.
What are the consequences if I do not pay the balance on my Affirm account?
Because Affirm does not impose any fees, including late fees, you will not be charged for any overdue payments. On the other hand, Affirm will take into consideration the fact that you have not paid back your loan or that you have paid it back late when determining whether or not to grant you approval for future Affirm loans. Affirm will notify Experian of any missed or late payments harming your credit score. Affirm reserves the right to write off your loan if you go more than 120 days without making a payment on it.
