What is BNPL?

Ever filled up your online cart and gone to the checkout only to see it’s way more than you planned to spend?  Or you need or want to buy a sofa or workout equipment, but the cost doesn’t fit within your budget? Buy Now, Pay Later (BNPL for short) gives you the option to break up larger purchases into multiple small ones over a period of time.

With BNPL, you can pay a much smaller upfront cost to purchase items, and then pay for those items over time. Because BNPL is fully integrated with most online shopping platforms, it’s not only easy to use, it’s everywhere.

But with so many different BNPL options out there, how do you know which one to pick? Here’s our ultimate guide to finding the right Buy Now, Pay Later option for you.

What to know

• For long-term purchases, consider using Affirm
• For brand-specific purchases, use Apple or Amazon’s installment plans
• For smaller purchases consider PayPal’s ‘Pay in 4'

What is Buy Now, Pay Later? 

Buy Now, Pay Later is a short-term financing option that allows you to make purchases and pay for them at a future date, often in biweekly or monthly installments. Popular BNPL companies include Affirm, Afterpay, PayPal and Klarna. 

If you are planning on making a bigger purchase and want to budget for that purchase over time, it may make sense to use Buy Now, Pay Later. What’s more, qualifying for a Buy Now, Pay Later plan could be easier than qualifying for a credit card, especially if you don’t have an established credit history. 

One thing to keep in mind is that using a BNPL service can lead to overspending and late fees. It’s important to make sure you have a plan to pay off the purchase before you hit ‘buy’. 

Best Buy Now, Pay Later Options 

Affirm  

How it works: You have a few different options, depending on the size of the purchase or the retailer.

• Pay in 4: your purchase is divided into four equal interest-free installments. Each installment is due every two weeks, with the first payment due at checkout.
• Monthly payment plans: pay over time for larger purchases in monthly installments

Fees: The interest rate depends on a combination of what type of plan a retailer offers, and your credit history. Many apparel and retail merchants offer Affirm’s Pay in 4 option which is interest-free with no late fees. Big box and big-ticket retailers tend to offer Affirm’s longer term installments that range from 0-36% APR, with no late fees.

Note: Affirm charges simple interest (vs. credit cards that charge compound interest rate); so a 30% stated APR equates to an effective rate of ~20% APR.

Loan terms: One month to 48 months 

Merchants: Over 12,000 merchants offer Affirm, including Amazon, Walmart, Target, Wayfair, Peloton, Casper, Allbirds, and even Expedia and Priceline! Consumers can use Affirm at other non-integrated retailers via affirm.com or the Affirm app, which offers a single-use virtual card for the purchase. 

Loan maximum: $17,500 

How to qualify: There’s no minimum credit score to apply, but Affirm will perform a soft credit check. The company will determine your eligibility based on how long you’ve been using Affirm, the purchase price and if you have any outstanding loans with Affirm. 

Afterpay

How it works: Your purchase is divided into four equal interest-free installments and each installment is due every two weeks, with the first payment due at checkout. 

Fees: You may be charged a late fee of up to $8. All fees are capped at 25% of the purchase value.

Loan terms: Six weeks 

Merchants: Over 100,000 merchants take Afterpay, including lululemon, Urban Outfitters, Michael Kors, Sephora and Adidas. Consumers can also use the Afterpay Card to pay for purchases in-store. 

Loan maximum: The amount of credit you can access depends on how long you’ve been using Afterpay. 

How to qualify: There’s no minimum credit score to apply, but Afterpay will perform a soft credit check. The company will determine your eligibility based on how long you’ve been using Afterpay, the purchase price and if you have any outstanding loans with Afterpay. 

Klarna 

How it works: Klarna offers a few different payment options.

• Pay in 4: Your purchase is divided into four equal interest-free installments and each installment is due every two weeks, with the first payment due at checkout
• Pay in 30: You pay nothing for 30 days, then pay the full purchase price 
• Financing: You can pay for a purchase with a loan of up to 36 months

APR & fees: Interest rates for financing range from 0% to 24.99%. You may be charged a late fee of up to $7. 

How to qualify: There’s no minimum credit score to apply, but Klarna will perform a soft credit check. The company will determine your eligibility based on how long you’ve been using Klarna, the purchase price and if you have any outstanding loans. 

Zip 

How it works: Your purchase is divided into four equal interest-free installments and each installment is due every two weeks, with the first payment due at checkout. 

Fees: Zip charges $4 for every purchase, or $1 per payment. You’ll be charged a $7 late fee for each late installment.

Loan terms: Six weeks 

Merchants: Over 51,000 merchants take Zip, including Best Buy and Revolve. Consumers can also use the Chrome extension or app to make a purchase with retailers not paired with Zip. 

Loan maximum: $1,500

How to qualify: There’s no minimum credit score to apply, but Zip will perform a soft credit check. The company will determine your eligibility based on how long you’ve been using Zip, the purchase price and if you have any outstanding loans with Zip. 

‘Pay in 4’ with PayPal

How it works: Your purchase is divided into four equal interest-free installments and each installment is due every two weeks, with the first payment due at checkout. 

Fees: None 

Loan terms: Six weeks 

Merchants: Millions of merchants take PayPal, but it’s not accessible for merchants that aren’t integrated with PayPal.

Loan maximum: $1,500

How to qualify: There’s no minimum credit score to apply, but PayPal will occasionally perform a soft credit check. The company will also look at factors beyond your credit score when determining eligibility. 

Sezzle

How it works: Your purchase is divided into four equal interest-free installments and each installment is due every two weeks, with the first payment due at checkout. You also get one free reschedule of one of your payments, and can extend the total loan out two weeks. 

Fees: No late fees, but Sezzle will charge you $10 if your payment fails or you reschedule a payment.  

Loan terms: 6-8 weeks 

Merchants: Around 50,000 merchants take Sezzle, including Target. 

Loan maximum: $2,500

How to qualify: There’s no minimum credit score to apply, but Sezzle will perform a soft credit check. The company will determine your eligibility based on how long you’ve been using Sezzle, the purchase price and if you have any outstanding loans with Sezzle. 

Amazon Monthly Payments 

How it works: This program allows you to split the cost of an item across five months with no interest or fees. The price of the item is divided into five equal installments, with your first payment due when the product ships (20% of the total price). Each payment is due 30 days after.

Other details: You can only use Monthly Payments for one qualifying product in each product category. You can qualify for Monthly Payments if your Amazon account has been active for at least one year, have a credit card tied to your Amazon account and have a positive payment history at Amazon. There’s no credit check when using Monthly Payments, but only certain items are eligible. 

Apple Monthly Installments 

How it works: This program allows you to split the cost of an Apple item over 12-24 months with no interest or fees. The price of the item is divided into equal installments, with your first payment due when the product ships (20% of the total price). Each payment is due 30 days thereafter.

Which Buy Now, Pay Later option should I use? 

Which method you use depends largely on what you want to buy, what payment methods the merchant accepts, and your financial situation. 

If you need a longer-term financing option, Affirm may be a good option for spreading a larger purchase out over time — especially because they offer a $17,500 loan maximum. 

If you have a smaller purchase and want to avoid interest and fees, consider PayPal or Affirm’s ‘Pay in 4’ option.

If you’re planning on purchasing a specific item at Apple or Amazon and need to break up your purchases, consider using their company-specific installment plans.