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What is Affirm? Everything You Need to Know

By Kyle Kapper

Updated Oct 5, 2023

What is Affirm

    When it comes to short-term financing today, and any other financing method for that matter, some common fears are hidden fees and complex terms. Anything that looks too good, can’t be true. There always has to be something, right?

    However, Affirm takes full advantage of this issue and makes it its mission to give clients peace of mind. The platform promises clients no hidden fees and even access to an Affirm loan which is repaid with interest free payments. There are no service fees, late fees, or any other kind of fees. Due to this Affirm even claims to help consumers save money.

    Other Buy Now, Pay Later Loans, also known as point on sale loans, draw in consumers because they do not charge interest at all. However, they have other charges. These charges can be avoided, and the platforms have other means of making money. 

    So, what unique advantages does Afirrm offer? Does their approach make them any better than other short term installment loan companies? Most importantly, is Affirm for you?

    Let’s find out.

    What is Affirm?

    Affirm is a popular buy now pay later service that allows consumers to make in-store or online purchases in a series of installments. The service is accessed via an app and a Chrome extension for web browsers on desktops.

    It has two different payment structures. The first follows the usual model of a first payment followed by three bi-weekly payments. These four payments comprise 25% of the entire cost of the item being purchased.

    The other option allows for a longer payment period, ranging between three and twelve months.

    Affirm positions itself as a trustworthy point on sale loan provider by promising no additional or hidden fees.

    However, that may make you wonder how it makes money, and if the lack of fees is being compensated for suspiciously. Can we trust it?

    Is Affirm Safe?

    Affirm is indeed safe. It has clear service terms and is accredited by the BBB(Better Business Bureau) based on numerous positive reviews. It also makes most of its money from merchant fees, fees which the merchants pay Affirm so that they can enjoy an increase in sales.

    How Does Affirm Work?

    Now that we know the basics, let’s get into the details.

    What should you expect when using Affirm? What do you need? Here’s everything you need to know about how Affirm works.

    How Do I Open an Affirm Account?

    The first step to accessing Affirm loans is downloading the Affirm app. You can also sign up on Affirm’s website or at a partner store’s premises.

    Affirm will then requires a mobile phone number registered in the United States or its territories to complete the registration process and ensure your account security. This step is crucial as it allows them to validate your identity during the account setup and login procedures. Note that it must be a number from U.S. or U.S. territories.

    Once your account is successfully created, Affirm will prompt you to provide your mobile number. Every time you log in, you’ll be asked to enter this number, after which they will send you a verification code via text message. 

    It’s important to note that Affirm will never reach out to you via phone call, email, or text to request your verification code, so you mustn’t share it.

    During the process of signing in, you will be requested to set up a passcode, but you can do that later. Affirm also recommends using a device that can allow you to register your fingerprint and face for fingerprint and facial recognition. These make the signing-in process easier.

    It is important to note that as you create your account, you will need to provide:

    • Your full legal name and registered phone number

    • Your birth date

    • The last four digits of your social security number

    What Are the Credit Requirements for Affirm Loans?

    Affirm refrains from providing specific credit score requirements for qualification. Eligibility is determined by considering your comprehensive credit history and your payment history with Affirm. Sometimes, they may even consider economic circumstances. 

    However, various reports state that you will need a credit score of at least 550. The good news is that they only conduct a soft credit check, and do not reject new users. 

    That being said, you need to note that they do not always approve applications. You may also be approved for a loan at some stores, but not others. Therefore, the better your credit score, the higher your chances of being approved and the more flexibility you have.

    How Do I Shop on Affirm?

    Payment on Affirm is made in three different ways. Payment on the app is different quite similar to payment on the web browser, so we will look at how to do the payment on the app and at partner stores.

    Steps for shopping on the Affirm app or website:

    • Log into your account

    • Type in your mobile number

    • Enter the four-digit verification code that you will be texted

    • Give the name of the store you are shopping in

    • Say how much you need

    • Wait for approval

    To shop at partner stores using Affirm loans, follow these steps:

    • Once you are done shopping, go to checkout and select Affirm as your payment method

    • Enter your mobile number

    • You will be requested to type in a four-digit verification code that Affirm will send you via text

    • Wait for approval

    Approvals are not always granted. Just as we discussed in the credit requirement section, to enhance your chances of getting approved, maintain a positive payment history with Affirm. They will also consider things like how long you take to pay back, whether your payments are ever late etc.

    How are Payments Installments Done on Affirm?

    Affirm has two payment structures. One does not charge interest on payments while the other does. Here is a brief comparison between the two:

    Affirm a 4-Part Payment Plan or Split Pay 

    Split Pay is the simplest option provided by Affirm, similar to the traditional four-part payment plans often offered by Buy Now Pay Later (BNPL) loans.

    In this scheme, Affirm breaks down your overall purchase amount into four equal payments, all of which are interest free. The initial payment, or down payment, is usually required upon checkout. The subsequent three installments are automatically charged to your debit card, checking account, or credit card in biweekly payments until the entire loan is settled.

    Therefore, with this plan, you will have six weeks to pay back the loan.

    Affirm Monthly Payment Plan

    Affirm’s monthly payment plan promises flexibility by allowing you to pay over a longer period than usual for BNPL services and offering three different durations: three months, six months, and twelve months.

    For this particular payment structure, you will be charged interest between 10% and 30% APR. The payments are done monthly.

    Here is a quick summary:

    TypeSplit Pay Monthly Payment Plan
    Interest 0%APR10% to 30% APR
    DurationSix WeeksThree months, six months, or twelve months

    How Does Affirm Charge Interest?

    Affirm only charges interest for its monthly payment plan. Luckily, they do not use compound interest to calculate the rate. Instead, they use simple interest which means if you spread your loan over more months, you will end up paying more.

    The rate of interest is given as a range between 10% and 30% APR because Affirm determines the rate on a case-by-case basis. They will assess things like your credit score and payment history to ascertain the rate. Yet another reason to maintain a great payment history and credit history!

    Does Affirm Charge Prepayment Fees?

    As promised, Affirm does not charge any extra fees for anything. That includes prepayment fees. If you can manage to pay back your loans earlier than scheduled, you do not have to worry about being penalized.

    Does Affirm Check Credit History or Send a Credit Report to Credit Bureaus?

    Affirm generally performs a soft credit check that does not affect your credit history. However, depending on what your score is, the credit report may create or eliminate limitations on future Affirm loans.

    So, will Affirm affect your credit score? The answer depends on what kind of loan you apply for and how well you honor your payments.

    Affirm generally does not report any late payments on Affirm loans that have 0% APR interest. However, all other loans that are to be repaid with interest can be reported to credit bureaus for delinquent payments and even late payments.

    Therefore, unless you are getting an essential item and are sure you aren’t biting off more than you can chew, it is best to avoid Affirm monthly loans.

    Does Affirm Have a Credit Limit?

    The limit is determined for each account, but the minimum is usually $50 and can go up to $17500. Again your limit is determined by your payment history, limiting how often you apply for new credit and your credit score. 

    Positively maintaining these factors can also improve your credit score.

    Can I Take Multiple Affirm Loans?

    Yes, Affirm allows a maximum of five concurrent loans for customers. However, not everyone is granted this luxury. So, although you can, it doesn’t necessarily mean you will be allowed to apply for multiple loans.

    Remember that multiple loans are a risk. Especially if they are short-term loans with due dates that are close together, or long-term ones that will accrue interest. Multiple loans on Affirm are only recommended if you are certain you can handle them.

    Here is a quick summary of Affirm’s most important features:

    Interest rate0% for some plans and between 10% to 30% for other loans (monthly payment plans)
    Payment StructureFour-part payment plan and monthly payment plan
    Prepayment penalty None
    Credit check typeSoft credit check
    Minimum and maximum credit limits$50 minimum and $17500 maximum

    Why You Should Consider Using Affirm

    So, now that we have a good idea of what Affirm is and what the experience of using it would be like, when should you consider applying for an Affirm loan?

    The safest answer is always: when you need essentials. Especially for the monthly payment plans, you need to be careful when applying for them because the interest will end up costing you.

    Then, why use Affirm over other BNPL services? Although all BNPL services have something unique to offer, Affirm should be your choice if you dislike extra fees and if you simply prefer the flexibility of multiple payment options. Take a look at this Affirm vs Afterpay article to make a final decision. If you still aren’t sold, check out Klarna vs Afterpay.

    Disadvantages of Using Affirm

    As you may have guessed, Affirm’s greatest disadvantage is its interest charge on its longer-term loans. Unlike most BNPL loan services like Klarna, Afterpay, or Sezzle, Affirm stands out from the crowd by not only having interest but also reporting to credit bureaus when compelled to.

    The best way to use Affirm safely if you aren’t good at keeping track of your payments is to either avoid the monthly structure or stick to the four-part plan.

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