So, you finally found that thing you direly want to buy.
But unfortunately for you, you don’t have enough cash to buy it. And you don’t want to put it on your credit card.
If only there were some way you could pay for it over time.
Well, rest easy, friend. There is.
In comes Affirm. A point-of-sale financing company that can help you buy that thing you can’t entirely pay for right now, but you could pay for when you can make payments over time.
Below, in this Affirm loan review, we’ll cover everything you’ll need to understand before buying with Affirm.
What is Affirm credit?
You might be scratching your head after reading “point-of-sale financing company,” but don’t worry, it’s simpler than it sounds.
Affirm is a company that offers an online service that allows you to pay for retail purchases in monthly installments. They provide this service through a no-fee loan to help cover the cost of your online shopping.
Affirm acts as an alternative to credit cards, which is great if you’re still building your credit and need to make a large purchase or if you know a purchase is within your budget, and you’d like to make payments.
If you’ve spent some time online shopping, you’ve probably come across Affirm during the checkout process. Currently, over 2000 retailers are using Affirm.
Here’s a shortlist of just some of the biggest retailers offering Affirm credit:
- Walmart
- Adidas
- Expedia
- Delta Vacations
- Wayfair
And if you’re not a fan of e-shopping, Affirm even makes an appearance in some select physical stores!
But unfortunately, for those of you in Iowa and West Virginia, you won’t be able to get any Affirm loans.
What is Affirm financing?
In case you haven’t gotten the point yet, the whole point of Affirm is to help you finance your purchases, sort of like you would with a mortgage or car payment.
So now that you have a general idea of what Affirm does let’s take a look at how financing with Affirm works.
The overview:
If approved, Affirm will offer you a no-fee loan for either the entire requested amount or a portion of it. After being approved, you’ll select a payment schedule to pay back the loan that you now owe to Affirm.
Affirm allows you to pay for your purchase in smaller amounts over an extended time.
Here’s an example:
The number of Affirm loans you can take out is unlimited, but you still have to pass approval each time, so there’s no guarantee. And yes, this still stands even if you currently have an Affirm loan.
Affirm offers loans up to $17,500 at a time. So unless you’re buying something super costly, Affirm can handle just about any of your average retail purchases.
If you want to get an idea of what a loan will look like for you, you can try out the Affirm APR calculator.
The specifics of Affirm:
Let’s get into the more in-depth details of Affirm financing.
Down Payments Ahead:
If you noticed above, it states that when you apply for a loan with Affirm, you may not get approved for the entire amount you requested.
In such cases, you will, unfortunately, have to pay the remaining cash as a down payment for the loan. So as lovely as Affirm is with lending money, they can’t always foot the bill.
The Affirm Credit Check:
Affirm, like any loan provider, will run a soft check on your current credit and credit history to see if they can provide you with a loan. After all, they still have to do their due diligence on you to protect themselves.
Fees and APR:
Are you tired of reading it yet? No-fee loan. No-fee loan.
Affirm offers NO fees — zero, nada, none; no late, prepayment, or service charges will come your way. It’s one of the most significant pros of using Affirm.
But…
Where there’s a pro, there’s a con. This comes in the form of varying APR. The APR range on Affirm loans goes from an excellent 0% to a not-so-great 30%.
Just to add to the interest misery, Affirm won’t give you a refund on any interest already paid on a returned item. So I hope that the new couch from Walmart is comfy!
What credit bureau does Affirm use?
Affirm only reports some of its loans and payments, but when it does, it reports to the major credit bureau Experian.
It’s also important to note that loans from Affirm will show up separately on your credit report.
What credit score do you need for Affirm?
When it comes to getting approved during an Affirm credit check, it’s pretty easy to pass.
There’s no minimum on an Affirm credit score needed for using Affirm and applying for a loan. Therefore, those of you with weak or no credit, you can still be approved for an Affirm loan.
Along with their soft credit inquiry, they also inspect a multitude of other factors. So keep in mind that there’s still a chance that you can still get that loan to get that funky chair you need for your office, even if you’re new to building your credit.
Does Affirm affect credit score?
It’s always a toss-up when applying for loans or checking to see if you qualify because you’re worried that your credit score will take a hit.
Don’t worry.
Pre-qualifying and even applying for loans with Affirm will not have any effect on your credit score. And the same applies to make an account with Affirm.
But that’s not to say that Affirm can’t affect your credit score at all.
Taking an Affirm loan into your hands can affect your credit score. If you miss an Affirm payment, then your credit score will take a hit. Ouch.
Lucky for you, though, this also works in reverse. If you make your payments on time and pay off the loan, you may see an improvement in your credit score. However, keep in mind that Affirm does not report all loans to their credit bureau Experian.
Considerations Before You Use
If it fits within your budget, Affirm can be a great and convenient tool to make a purchase. But remember always to consider if you can make the payments on a loan when deciding to take one out.
Let’s look closer.
When Affirm is a good idea:
Affirm loans are a great idea when you don’t have any credit or cash saved up but need to make a purchase immediately.
It’s also a much better alternative to maxing out a credit card if your credit limit just isn’t enough to cover your purchase.
Utilizing large portions of your credit limit can affect your score negatively after all, so it might be a good idea to consider Affirm loans if the option is available.
When Affirm is not a good idea:
Affirm loans aren’t going to be the best deal if you do have a credit card that you can pay off in full. Remember, Affirm acts as an alternative to credit cards. Specifically, when you can’t use one for purchases.
So, be wise.
If the purchase is no problem for your budget and you can use your credit card, then opt for that option instead.
Be wary of using Affirm loans if you’re one of those people that’s always only making the minimum payments on your credit card. If you currently can’t handle the debt you have, then taking on a loan with interest isn’t going to be the smart move.
Finally, it’s always good to keep in mind that if you have the cash for a purchase, then you should use that money instead. It’ll be cheaper in the long run than taking on an Affirm loan with heavy interest.
How to apply for Affirm
There are a total of three ways you can apply for a loan with Affirm:
- In-Store
- Online
- In-App
The application process is simple. You’ll need to provide Affirm with some information when applying for a loan. You can do this through the app or online at checkout.
Affirm will need the following information from you:
- Your full name
- Email address
- Date of birth
- Mobile phone number
- Last four digits of your Social Security number
After providing the information, they’ll send you a confirmation code directly to your mobile phone. You may also be asked to submit an ID or confirm your income.
If you get approved for a loan, you’ll immediately know how much money you’ve been approved for. You’ll also get to inspect the interest rate and terms you’ve been offered.
If you accept the offer and make your purchase, you’ll be sent monthly reminders about future payments until the loan is fully paid off.
The first payment on your new loan is due within 30 days of the date Affirm completes your order.
The bottom line with Affirm
Affirm is a powerful purchasing alternative to credit cards that can be a handy option when it’s available.
Whether using an Affirm loan to make a purchase is the right move for you and your credit, is entirely up to you. But rest easy knowing that Affirm is there to make the process simple and worry-free.
If you do choose Affirm, remember to pay attention to the APR. Happy shopping!
