Affirm offers personal loans on online purchases, through various retailers that are willing to offer payment plans. Payment plans, rates, and other terms vary according to the retailer, and purchasers can select their payment schedule. The lender charges no fees, and simple, fixed interest or no interest on transactions. Affirm shows an estimate of how much you can spend based on financial information you provide, but there are no loan limits. It grants instant financing for purchases you make online, if you're approved.
- Pros and Cons
Upfront payment plan
No late fees
No minimum credit score
Might help improve your credit
Interest rates can be high
Not available with all retailers
No refund on interest paid
No rewards program
Not every loan will improve your credit
Affirm charges no fees on its personal loans.
Pros of Affirm Loans
- Instant financing: Find out if you’re approved while in the online shopping cart and receive instant financing for your purchase.
- Upfront payment plan: Payment plan options, including total cost, are given before you decide to accept. You can choose your desired plan and see all of the information, selecting what works for you.
- No late fees: Affirm doesn’t charge any late fees.
- No recommended minimum credit score: Affirm does not state a recommended minimum credit score, so those with fair or poor credit may still be able to qualify.
- Might improve your credit: Some retailer plans report to the credit bureaus, so your payment history could show up on your report. If you make on-time payments, positive payment activity potentially will be reported and could help improve your credit score.
Cons of Affirm Loans
- Interest rates could be high: Interest rates vary by retailer and payment plan. As a result, interest rates could be high. These rates could potentially be even higher than credit card rates.
- Not available with all retailers: Not all retailers accept Affirm for payments. Even though there are thousands of retailers that do, not every online shopping experience can be handled with Affirm.
- No refund on interest paid: Even though you can get a refund for the purchase price, you won’t receive a refund on the interest you’ve already paid. So, if you’ve made some payments, or interest has accrued, you’re on the hook for that interest.
- No rewards program: Unlike when paying with some credit cards, you won’t be able to amass rewards points or cash back when paying with Affirm.
- Not every loan will improve your credit: While some payments are reported to credit bureaus, not every plan is reported. As a result, you might not see an improvement in your credit, even if you pay on time.
Loan Rates & Terms
Because different retailers offer different plan options, the rates and terms vary widely. However, in general, you can expect various interest rates, ranging from 0% APR financing with some retailers up to 30% APR financing at others.
Interest doesn’t compound, so you’ll only pay a flat interest rate on each purchase.
Most loans are available for three, six, or 12 months. However, there are circumstances in which, for smaller purchases, you might be able to get a loan term as short as one month. For larger purchases, a retailer might allow you to pay over the course of 48 months.
Before you choose a plan, though, you’ll be given available options, and you can decide which terms best fit your needs.
There is no loan limit with Affirm. In general, you simply look at the available payment plans, apply for the one you like, and then see if you’re approved for your purchase. It’s possible to have multiple Affirm payment plans at once for different purchases.
Realize, though, that Affirm can deny you financing based on the amount you’ve already borrowed and other factors. So, even though there is no formal limit to the number of loans you have and the amount you can borrow, you might be limited over time.
Avoid trying to juggle too many payment plans. After a while, you could lose track of where you are, and could also end up paying a lot more in interest than you think.
Affirm charges no additional fees. The total you pay for your loan is listed upfront, so you don’t have to worry about any hidden costs. There are no prepayment fees, so you can pay off your plan early and save on the interest. Additionally, there are no late fees or administrative fees.
While it may not feel as serious as applying for a lump-sum personal loan elsewhere, Affirm does run a credit check to determine your eligibility for payment plans every time you select it as a payment method before checking out with a partnered merchant. While the soft pull may not affect your credit score, your loan and payments may still have an impact.
How to Apply
Affirm manages financing a little differently. You can apply for a loan plan through a merchant’s website or through the Affirm app. Once you pick the plan you like and are approved for financing, you can use the app to manage your payments. Your credit information will be used to determine the terms of possible payment plans before you can accept one.
Each time you get a payment plan, you’re getting a new approval, so you might be denied later on, based on factors like missed payments or how many other payment plans you already have through Affirm.
Affirm personal loans offer a way to pay for online purchases with real-time financing. It’s possible to set up short-term payment plans with a variety of terms and interest rates with retailers that accept Affirm. Plus, there are no fees associated with Affirm, so if you pay late one month, it won’t cost you extra money. If you want a more manageable way to pay off purchases while potentially building your credit, Affirm could be a good choice.
On the other hand, using Affirm to pay for too many purchases could potentially get messy because you’d have to keep track of multiple payment plans. Those could also add up every month to more than you originally wanted to spend in the first place. Plus, with rates as high as 30% APR, you could end up paying more in interest than you would charging a purchase to your credit card. If you have good credit and can pay off your purchases faster, a rewards credit card with a lower monthly APR may work better because it comes with the added advantage of allowing you to earn points or cash back, which may offset some of the interest costs.