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When you're ready to purchase a coat from Neiman Marcus or a new MacBook from Apple, you now have the option of financing the cost of your order over time with buy now, pay later. BNPL, also known as point-of-sale loans, is kind of like a modern day layaway option: Consumers can buy items online or in store, and then split up the cost of a purchase over a few weeks or a few months with regular installment payments rather than pay for the entire purchase up front.
There are many BNPL providers that have emerged in the past few years, and consumers are increasingly flocking to them to finance everything from clothing to travel to workout equipment. Some of the most popular BNPL providers include Affirm, Zip (formerly known as Quadpay), Afterpay and PayPal's 'Pay in 4'.
With so many BNPL options available to consumers, which provider is best? And for who? When compiling this round-up of popular BNPL options, Select looked at factors like APR, late fees, available merchants, whether a credit check is performed and if the provider reports to the credit bureaus to help you determine which provider is best for you. (See our methodology for more info on how we reviewed each POS loan.)
Affirm
Affirm
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Interest rates
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Loan terms
1 month to 48 months
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Fees
There are no late fees, but making late payments can affect your ability to get a loan in the future and possibly your credit score.
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Return policy
Customers are only refunded the principal amount, so if you don't have a 0% loan, you won't be refunded for the interest you paid before making the return.
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Available merchants
Affirm has 12,000 merchants including Amazon, Peloton, adidas and Target. Through affirm.com or the Affirm app, consumers are also able to use the BNPL option at any retailer, either online or in-store, that aren't integrated with the company. Consumers will receive a single-use virtual card to pay for their purchases.
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Loan amounts
Up to $17,500 on a purchase.
Pros
- Doesn't charge any late fees
- There are a lot of merchants that offer 0% APR
- You can use Affirm at whatever online or in-person retailer you choose to with its app or via its website
- The 0% 4 biweekly payment loans are not reported to the credit bureaus
Cons
- Loans that are reported to the credit bureaus could end up hurting your credit score regardless of whether you pay them off on time and in full
- You could end up paying a high interest rate if you can't secure a 0% loan
Who's this for? Affirm is a good choice if you need a longer-term financing option with a 0% APR and no late fees. It offers POS loans ranging from 1 month to 48 months with a limit of $17,500 per loan. Affirm is one of the few BNPL providers that offers consumers long-term financing options with a 0% APR.
However, the interest rate that you manage to secure on your loan depends on a variety of factors — including purchase amount, length of payment term and the merchant — so you could end up with an APR as high as 30%.
If you manage to secure a 0% loan, you also don't have to worry about late fees. Of the seven BNPL providers Select reviewed, Affirm was one of three providers that didn't charge any late fees. Though if you're late with payments, you might not able to get a loan from Affirm in the future, and it could potentially affect your credit score.
Affirm uses a soft credit check when approving consumers for loans. It also reports some loans to the credit bureau Experian. It doesn't report 0% four-biweekly payment loans or 0% loans with a three-month repayment period. Your payment history, how much credit you've used, late payments and how long you've had the credit line open can affect your credit score.
Affirm is a good choice because of its widespread availability: You can essentially use it on any purchase anywhere by using the Affirm website or the app.
Affirm has partnered with 12,000 merchants including Amazon, Peloton and Target. Through affirm.com or the Affirm app, consumers are also able to use the BNPL option at any retailer, either online or in-store, that aren't integrated with the company. Consumers will receive a single-use virtual card through the website or the app to pay for their purchases wherever they want.
While the Better Business Bureau gives Affirm an A+ rating (you can read more about the BBB rating process here), customer reviews are not so good. It has a 1.23/5 average rating based on 235 customer reviews on the BBB website at the time of writing. The customer complaints range from not being able to get ahold of customer service to not being able to obtain a refund.
Afterpay
Afterpay
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Interest rates
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Loan terms
Afterpay only offers 1 loan option: Customers can make 4 installment payments over 6 weeks. You have to make one down payment (typically 25% of the order), and then a payment once every two weeks.
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Fees
Afterpay does charge late fees: $8 or 25% of the transaction, whichever is less.
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Return policy
In order to return items, you'll have to go through the merchant first. Since you don't pay interest on your Afterpay loan, you don't have to worry about not being refunded for interest. Afterpay also offers partial refunds on orders. However, you will still be on the hook for payments until the merchant has accepted and processed the return.
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Available merchants
Approximately 100,000 merchants globally. Consumers can also use the Afterpay Card to pay for purchases in store. However, this is only available for some customers to use at select retailers such as Amazon, CVS, Target, Nordstrom and Macy's.
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Loan amount
The amount of credit you can access depends on how long you've been an Afterpay customer and on whether you're making your payments on time and in full. A new user will be able to spend less than someone with a longer history. The more you use Afterpay, the more you can spend with it.
Pros
- 0% interest on all credit options
- Doesn't perform a credit check
- Doesn't report to the credit bureaus so it won't affect your credit score
Cons
- There's a $8 fee for each late installment payment
- Consumers are unlikely get approved for higher credit limit until you've been a repeat customer
Who's this for? Afterpay is an Australia-based company that was recently acquired by Square, a digital payment company co-founded by Twitter CEO Jack Dorsey, for $29 billion. Afterpay doesn't consider itself a POS loan provider because it doesn't charge interest on its loans, but it is commonly referred to as a BNPL provider so we've included them in this round-up.
Afterpay is best for people who can make their payments on time, need a short-term financing option with 0% interest and don't want the loan to affect their credit score.
The company offers one product: a financing option with four installment payments due every two weeks over a six-week term. You make one down payment at the time of purchase (typically 25% of the order) and then pay the rest over six weeks.
There isn't a limit on how much credit you can take out with Afterpay. Your credit limit depends on how long you've been an Afterpay customer, and whether you're making your payments on time and in full. A new user will likely have a lower limit than someone with a longer history, so if it's your first time using Afterpay, you might have to stick with purchasing smaller-ticket items. The average Afterpay order is only $150.
One major advantage of using Afterpay, over other POS providers, is that it doesn't affect your credit score at all — the company doesn't check your credit score, and it doesn't report any loan information to the credit bureaus.
A major drawback of using Afterpay are the late fees. You'll be hit with an $8 fee, or 25% of your transaction, whichever is less, for each late payment. If you fail to make a payment, you won't have access to the platform to take out a new loan until you make a payment.
When it comes to availability, Afterpay can be used at more than 100,000 merchants around the world including American Eagle, Bed Bath and Beyond and lululemon. Afterpay also offers some consumers the ability to use the app to make purchases at select retailers such as Nike, Kroger, Amazon and Macy's. Whenever you use the app, you'll be given a one-time virtual card.
Much like the other POS providers in this round-up, Afterpay has poor customer service reviews on the Better Business Bureau website. It had a 1.38/5 average rating based on 98 customer reviews at the time of writing. Many of the customer complaints focused on canceled orders from the merchant or failure to receive a refund from Afterpay. BBB gives Afterpay an A- rating based on its own ratings system.
Zip (formerly known as Quadpay)
Zip (previously known as Quadpay)
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Interest rates
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Loan terms
4 interest‑free installment payments over 6 weeks
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Fees
Zip charges a $4 transaction fee for every purchase, or $1 per payment.
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Zip will charge a $7 late fee for each late installment payment (this amount may vary by statute and state). If a customer is one day late with their payment, or if a customer has a delayed paycheck, Zip may be willing to move payment due dates.
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Return policy
Customers have to go through the merchant for their refund. Once the merchant has processed the refund, a refund is processed by Zip and the customer will get their money back.
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Available merchants
Zip is connected with over 51,000 merchants globally, including Target, North Face and Wrangler. Consumers are also able to use an app or Chrome extension to make a purchase with retailers that are not integrated with Zip. Customers will receive a virtual, one-time card to fund their purchase either in-store or online.
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Loan amounts
Typical purchase amounts range between $35 and $1,500, but maximum amounts vary by retailer.
Pros
- Doesn't perform a credit check
- Doesn't report to the credit bureaus so using the service won't help or hurt your credit score
- 0% interest
Cons
- There's a $4 fee for each loan you take out ($1 for each payment)
- There's a $7 fee for each late installment payment
- You can only opt for a 6 week BNPL option so it's not a good choice if you need a longer repayment period
Who's this for? Zip, formerly known as Quadpay, is a BNPL service available internationally. Zip is a good choice for consumers who want to use a BNPL option wherever they shop, and they don't want it to affect their credit score.
Zip has one product that's similar to Afterpay: consumers can make a purchase and pay it off in four interest‑free installment payments over six weeks. Much like PayPal 'Pay in 4', Zip has a value limit on orders, so you can only spend up to $1,500 (but maximum amounts vary by retailer).
Much like the other BNPL providers, Zip doesn't report these loans to the credit bureaus. It also doesn't perform any credit checks before approving customers for a loan.
One of the major perks of Zip is how easy it is to use at most retailers. Zip is connected to over 51,000 merchants globally, including Sears, Target, Apple, Zara and ASOS, and customers can also use the app or the browser extension to shop at retailers that are not integrated with Zip.
Whenever you use the app or the browser extension, you'll receive a virtual, one-time card to fund your purchase either in-store or online. That means you can use Zip to pay for dinner or groceries in-person as well as for your online clothing orders.
However, Zip does come with one major drawback: It's the only BNPL provider we reviewed that charges a convenience fee. Zip charges customers $1 per payment you make or a $4 fee for your order.
There is some flexibility with payment due dates. If a customer is one day late for a payment or has a delayed paycheck, Zip may move payment due dates if you contact the company and request more time.
Of the BNPL providers that we reviewed, Zip also has the highest customer satisfaction rating with the BBB with a 4.01/5 average rating based on 1,191 customer reviews at the time of writing. BBB gives it an C rating based on its own rating system, and Zip is not accredited.
'Pay in 4' with PayPal
'Pay in 4' with PayPal
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Interest rates
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Loan terms
There is one loan option: Make 4 installment payments due every two weeks (for a total of 6 weeks). The first payment is due at the time of purchase.
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Fees
There are no late fees.
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Return policy
Customers must go through the merchant in order to receive a full or partial refund.
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Available merchants
Pay in 4 is available at millions of merchants through the app, but it's not accessible for merchants that aren't integrated with PayPal.
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Loan amount
Orders must be between $30 and $1,500
Pros
- There's no interest
- There are no late fees
- PayPal is connected to millions of retailers
- Loans aren't reported to any of the credit bureaus, so it won't help or hurt your credit score
- PayPal only occasionally performs a soft credit check and looks at factors beyond your credit score when determining your eligibility
Cons
- It's only available in 44 states so, if you live in Georgia, New Mexico, North Dakota, Missouri, South Dakota or Wisconsin, you won't be able to use it
- You can only use PayPal "Pay in 4" at merchants connected with PayPal
- Your order value is capped at $1,500, so you can't use it to buy very expensive items
Who's this for? PayPal is a global financial technology system known for its online payments system. It recently launched its own BNPL product known as "Pay in 4," which is a good option for people looking for a short-term financing option with 0% interest, no late fees that aren't reported to the credit bureaus.
PayPal's 'Pay in 4' allows consumers to make four installment payments due every two weeks over a six-week period. The first payment, like a down payment, is due at the time of purchase.
Consumers are limited to taking out loans less than $1,500, so it's not a great choice if you're looking to finance a really expensive purchase.
What distinguishes PayPal's 'Pay in 4' from other short-term BNPL providers Afterpay, is that it doesn't charge any late fees. It also does not report to the credit bureaus, so it won't affect your credit score.
When it comes to determining your eligibility for a loan, PayPal doesn't check your credit score most of the the time. It will, however, occasionally perform a soft credit check. According to a representative at PayPal, the company uses "vast consumer data to understand an applicant's creditworthiness."
PayPal 'Pay in 4', unlike the other BNPL providers on the list, doesn't have a separate app, or browser extension or website that allows consumers to use the service at online or in store retailers not integrated with the company. PayPal does, however, have the advantage of being an established, multinational financial technology company, so it has millions of merchants available such as Uniqlo, Estee Lauder, Target and Best Buy.
Since 'Pay in 4' is one of many products offered by PayPal, it doesn't have a separate BBB customer service rating.
Our methodology
Select focused on the following features when examining popular BNPL providers:
- APR: Some BNPL loans charge interest while others do not. Even if consumers pay off their installment payments on time and in full, they may be charged interest or an average percentage rate (APR) on their loan.
- Reporting to credit bureaus: Some POS loan providers report some or all loans to the credit bureaus while others report none. Additionally, some providers only report to some of the credit bureaus — Equifax, Experian and Transunion — while others report to all of them. Since POS loans have the potential to decrease your credit score regardless of whether you make your payments on time and in full (by decreasing the average age of your credit history), it's important to carefully read the terms of the loan to know if your score could be impacted.
- Late fees and other fees: Most BNPL providers only charged late fees if you failed to make your installment payment on time. However, some also charged convenience fees when you take out a loan.
- Credit checks: There are two types of credit checks, a hard credit check or a soft credit check. Hard credit checks can usually cause a small drop in your credit score, while soft credit checks have no impact on your credit score (while also looking at factors beyond someone's credit scores). (Affirm, however, did not disclose what specific factors they looked at.)
- Available merchants: We not only looked at the number of merchants that were directly integrated with the provider but also whether consumers could shop at merchants not partnered with the provider. Many BNPL providers either had an app, a browser extension or a website that enabled consumers to use a one-time card which gave them access to a BNPL loan to finance their purchases.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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