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Apple is shaking up the buy now, pay later industry.
On Tuesday, the tech giant launched Apple Pay Later, which allows Apple Pay users to split purchases into four interest-free payments paid over six weeks without an additional fee.
Prior to making a purchase, Apple Pay Later users can apply for a loan between $50 and $1,000 and use it for in-app purchases or to buy products online through retailers that accept Apple Pay.
After you indicate the amount you would like to borrow, Apple conducts a soft credit check, which reviews your credit score to get an idea of how well you’re managing your current credit. This process won’t impact your credit score and is done to ensure you’re in a “good financial position” before taking on the loan, according to the company’s press release.
If you’re is approved for the loan, you’ll see the Pay Later option when you use Apple Pay online or make in-app purchases on iPhones and iPads. Purchases using the new service will be authenticated using Face ID, Touch ID or a passcode.
After Apple Pay Later is initially set up, you’ll also be able to apply for a loan right at checkout. You’ll need to link a debit card connected to your Apple Wallet as your loan repayment method.
Apple says users will be able to view, track and manage all of their loans within their Apple Wallet and will be able to see the total amount of their existing loans as well as the total amount due within the next 30 days.
Apple is the latest to enter the growing micro-loan space and joins popular BNPL services such as Affirm, Afterpay, Klarna and PayPal’s “Pay in 4” option. Here’s how Apple Pay Later compares.
Apple Pay Later
- Interest rate: 0%
- Payback timeframe: 4 payments over 6 weeks
- Loan amount limit: $50 to $1,000
- Fees: $0
Affirm
- Interest rate: 0% to 36%
- Payback timeframe: 1 to 48 months
- Loan amount limit: Up to $25,000
- Fees: No late fees. However, a late payment could negatively impact your ability to get a loan in the future and possibly hurt your credit score.
- Worth knowing: Affirm’s “Pay in 4” option allows users to divide their purchase into four interest-free payments made every two weeks. This option does not charge late fees.
Afterpay
- Interest rate: 0%
- Payback timeframe: 4 payments over 6 weeks
- Loan amount limit: Variable, but increases the more you use Afterpay. A long-term user will typically have access to more funds than a new user.
- Fees: Late fee of $8 or 25% of the transaction, which ever is less
Klarna
- Interest rate: 0% to 29.99%
- Payback timeframe: Up to 24 months
- Loan amount limit: Variable and is based on factors such as your payment history with Klarna and your outstanding balance.
- Fees: Up to $7 or 25% of the installment amount. Additionally, use of Klarna’s services are restricted until the missed payments are made.
- Worth knowing: Klarna’s “Pay in 4” option allows users to divide their purchase into four interest-free payments made every two weeks. Late fees for this option are the lesser of $7 or 25% of the installment amount, and services are restricted until missed payments are made.
PayPal’s “Pay in 4”
- Interest rate: 0%
- Payback timeframe: 4 payments over 6 weeks; first payment is due at time of purchase
- Loan amount limit: Between $30 and $1,500
- Fees: $0. However, a late payment could negatively impact your ability to get a loan in the future and possibly hurt your credit score.
As with credit cards, buy now pay later services can put you at risk of piling on debt faster than you realize if you’re not careful. Before taking on more debt, be sure to review your current financial situation and evaluate if you’ll be able to pay off what you owe before it becomes unmanageable.
Whether you’re using a buy now, pay later service or a credit card, it’s important to remember that you’re still borrowing money that you’ll need to pay back eventually.
Missing a payment could hurt your credit score, can potentially disqualify you from getting certain loans or credit cards and may mean you’ll pay higher interest charges on the credit cards, mortgages or car loans you’re able to receive.
Editor’s note: This story has been updated to include additional information about Affirm’s and Klarna’s “Pay in 4” offerings.
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