If you’re an avid online shopper, you’ve probably heard or even considered using other payment solutions offered by new services wherein you can finance your online orders without worrying about interest. This seems like a treat, of course, as it allows you to pay off expensive purchases over time easily and not in one big chunk.
One of the more popular financing services that have been catching people’s attention is Klarna. Klarna grew in popularity because it gives customers different options when it comes to payment. For instance, you have the option to pay off the purchases you’ve made in 4 installments without being charged interest (as long as you pay on time).
Not only that, you can even delay the payment for as long as 30 days or apply for 6 to 36-month financing plans. Many things are possible with Klarna, and with the amount of flexibility it offers, it’s easy to see why many people have been flocking to it.
How Does Klarna Work?
Basically, Klarna works with various retailers to provide customers with third-party financing solutions. During checkout, you’ll know when the retailer you’re buying from supports Klarna because it will be available as a payment option. Klarna has three structures for you to choose from: Pay in 4, Pay in 30, and 6 to 36-month financing terms.
At the moment, the first payment structure—Pay in 4—is the most popular. As its name suggests, you can split the payment into 4 installments which you’ll have to pay every two weeks. The first payment will take place during checkout. In other words, you’ll only have to pay $50 during checkout if your purchase costs $200. From there, you’ll have to pay $50 every two weeks until the $200 is paid in full.
Klarna won’t charge any interest for these installments. However, if you pay late, you’ll be charged up to $7 if the payment doesn’t push through after 2 tries. The second payment structure is Pay in 30, which is very much different than the first plan. Pay in 30 allows you to delay the payment up to 30 days instead of paying during checkout.
Klarna also has a traditional loan option ready for those who are interested. This is only available at select retailers, though. The financing terms for this could range between 6 to 36 months.
Is Klarna for You?
It’s always recommended to pay for something upfront if you have the funds for it, as it’s definitely cheaper than having to finance the purchase. However, there are times when you really need something, but you aren’t able to cover the full amount during checkout. If you’re confident that you can pay off your balance, then you can definitely rely on Klarna to help you buy whatever you need.
It’s best to go for the payment plans that charge low or no interest, such as the Pay in 4 and the Pay in 30 structures.
Consider Klarna If You…
Don’t Qualify for a Credit Card Yet
If you’re new to the world of credit and you don’t have a credit card just yet, you’ll be surprised to find that it will actually be much easier for you to qualify for Klarna. While your credit score is one of the considerations for approval, there’s no minimum score needed.
Don’t Have a High Credit Limit
It would be best if you utilized Klarna instead of maxing out your credit card. After all, doing so can potentially hurt your credit score, and you might end up receiving penalties.
Need to Buy Something Expensive
Of course, if you need an item but you don’t have enough to pay the full amount, Klarna is a great way to receive the product now and pay for it later. You just have to make sure that you can pay your balance on time.
Klarna Isn’t for You if You…
Don’t Pay Down Your Credit Cards
If you’re the type of person who only pays the minimum in terms of your credit card, it’s not recommended if you add another loan to your list. If the purchase is non-essential, you should just wait until you have the full amount instead of financing it.
Have a Difficult Time Managing Your Money
Whenever you finance with Klarna, the service will automatically take out the amount from your debit or credit card. If you’re bad at managing your money, there’s a high chance you could get overdrawn if there are not enough funds in your account.
Pros
- There are no fees or even interest as long as you don’t pay late.
- Gain access to exclusive deals and rewards.
- Numerous retailers support Klarna during checkout, including Macy’s, Etsy, and more.
Cons
- You’ll be charged a late fee of up to $7.
- The 20% APR will only take place after a month.
- The Pay in 4 and 30 payment plans won’t help you build up your credit score.
Conclusion
From what we’ve observed, along with the Klarna reviews we’ve seen online, this service is one of the most flexible payment options out there, and it’s definitely worth checking out if you’ve been meaning to buy something somewhat pricey. Consider which payment structure works for your needs and make sure you can pay on time so you won’t be hit with a late fee.
