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Affirm Personal Loans Review
An Affirm loan lets you finance online retail purchases, which you can then pay back in monthly payments within three to 12 months without fees or hidden charges. This new financing alternative to credit cards is perfect for customers who want to build credit, but before you sign up, it’s important to understand what you’re getting into.
Affirm retail financing at a glance
|Lender||Loan Amount||APR||Terms||Key Benefit|
|Affirm||Up to $17,500||0%–30%||3–48 months||No fees or compounding interest|
What we like about Affirm retail financing
An Affirm loan lets you pay for merchandise or services at thousands of online and in-store retailers. But unlike a credit card or personal loan, Affirm doesn’t charge late fees, service fees, prepayment fees or hidden fees. Affirm let’s you make monthly installment payments for everyday retail items. Its loans have fixed interest rates and set payoff dates, so you always know exactly how much you owe and when payments are due. Plus, repaying your Affirm loans on time improves your credit score; Affirm reports to Experian. We also like the fact that military members can apply for a 6% interest rate cap, and anyone can sign up for an Affirm savings account.
Things to consider
While pre-qualification at sign up is done with a soft credit check, in-app loan approvals work differently. Borrowing limits and interest rates are determined per purchase, and you may be qualified for some purchases but not others or may be asked to provide a down payment. Also, when it comes to repaying your loans, you can only make payments with a linked bank account.
If you’re not pre-approved for an Affirm account because of your credit scores, you may want to consider personal loans for bad credit.
Something else worth noting is that with a quick sign-up process and so many retailers accepting Affirm payments, it can be easy to overspend once you’re approved for an account. Affirm loans are also unsecured without fees, so you may face higher APRs, with some loans as high as 30%.
What you need to know about Affirm retail financing
Affirm is a point-of-sale lender offering alternative financing to credit cards and personal loans. Affirm loans are good for:
- Consumers who are new to credit.
- People trying to get away from credit cards.
- People trying to rebuild credit.
Affirm loans range from $1 to $17,500, with an average APR of 10% to 30%, however, some merchants may offer 0% APR specials. Depending on how much you borrow, terms can range from one to three months for small loans up to 48 months for large loans. Affirm prides itself on upfront pricing and zero-fee financing so you’ll get to see your APR, full terms and total payments before agreeing to the loan.
Signing up and pre-qualifying for Affirm is quick and easy. You need to provide a mobile number, full legal name, date of birth and last four digits of your Social Security number. Affirm runs a soft credit check that doesn’t hurt your credit score.
There are three ways to apply for a loan with Affirm:
- Make a purchase at a partner store: Affirm is partnered with thousands of online merchants in apparel, electronics, luxury, travel and more. You can apply for an Affirm loan at checkout with one of its participating merchants.
- Open an account: If you want to use Affirm for in-store purchases with a virtual card, create an account and apply online.
- Use the mobile app: Download the free app and follow the prompts to create an account.
Once you’re approved, Affirm will give you a one-time-use virtual card to pay for your items if it’s for a non-partnered or in-store merchant. If you’re making a purchase online with a partnered merchant, just choose Affirm at checkout.
Collateral and criteria
Affirm offers unsecured, closed-end installment loans, which makes payments and terms easier to understand. However, it does not offer secured loans, so users have no option to negotiate interest rates. Borrowing limits and interest rates are determined per purchase/per user account.
Affirm has no established minimum credit score requirement posted to its website. However, for account opening and pre-qualification, a soft credit check is conducted. For ongoing loan approvals, your established credit score and the way you use your Affirm account (loan amounts, payment history) will be taken into consideration.
Affirm retail financing vs. the competition
Affirm vs. Klarna
Klarna is also a point-of-sale lender that lets you pay for online and in-store purchases with a mobile app and a one-time-use virtual card. Klarna’s merchandise partners are much more internationally diverse than Affirm, as it is available in 17 countries.
Klarna is different from Affirm in the way it offers two payment plan choices. You can split purchases into four payments or choose Pay Later in 30-Days. Unlike Affirm, you can make payments with a credit or debit card and can choose to pay after shipped items are received. The average APR is 19.99%, and the minimum spend amount is $35.
Affirm vs. Bread
Like Affirm, Bread is also partnered with Cross River Bank to offer point-of-sale lending in much the same way as explained in our Affirm loans review. Bread’s installment loan terms range from six, 12 and 24 months, with an APR range of 0% to 29.99%, based on creditworthiness.
However, access to Bread is limited. The only way to apply for a loan is directly through a participating retailer’s website at checkout. Bread does not list merchant partners on its website or have a mobile app like Affirm and Klarna. This makes it harder to research purchases ahead of time.