Affirm operates similarly to a credit card.

The company allows you to make a purchase at an online store immediately and pay it back over time through fixed installments.

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0%-30% interest rate

The interest rates typically go from 0% – 30%. The 0% financing option is offered only at a select few stores. Generally, borrowers have up to one year to pay the loan back.

Users are not charged extra for early repayment.

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Good credit required

You need to have a good credit rating to use Affirm. When you make a purchase through the company, it carries out a soft check on your credit to assess your risk as a borrower.

The check does not affect your credit score. If you pass the check, your current credit score determines the interest rate you will be charged. The better score you have, the lower your interest rate.

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A downpayment may be required

For some borrowers, the company may ask for a down payment that must be paid during purchase. This can be anywhere from 10% – 50% of the cost of the item.

Affirm may not approve the purchase if the borrower does not accept making the down payment.

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Various repayment methods

Once you have been approved, Affirm offers three options to buyers at checkout.

• Three-month repayment.

• Six-month repayment.

• 12-month term.

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After the buyer accepts one of their payment plans, the purchase is processed as usual.

The online store will send you the product or service, and Affirm will transfer them the money for the purchase.

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Affirm will then become the creditor and send you regular reminders for your monthly payments.

These will generally start after one calendar month from the day that your loan is processed.

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Affirm’s other features

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Credit-building

If you do not have a high credit score or are new to the credit rating system because you are young, you may not get approved at most banking institutes for credit. However, you may still find it easy to qualify for a loan at Affirm after they have carried out a soft check on your credit history.

Once your loan has been approved and you make regular payments, Affirm will report your payments to the credit bureau Experian. Timely payments with the company will benefit your credit score, making it an excellent way to repair your credit.

Every Affirm loan you get will show up as a separate loan on your credit report, and every time you pay it on time, your credit score will rise further.

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Point of sale loans

Although every company is different, point of sale loans work similarly for them all. The lender makes the payment to the retailer on behalf of the customer at the time of execution of a transaction. The outstanding balance is recovered from the customer over time.

Some of the payment companies offer the loan at 0% interest for selected stores. Others charge interest at reduced rates, 5%-10%. This is why such credit companies are gaining popularity.

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Flexible payment schedules

One benefit of Affirm is that you can choose the payment plan that meets your needs. Select a plan with payback terms of three, six, or 12 months to pay off the short term credit when you want. You also get the option to choose how you pay off the credit, using online payments, bank transfers, checks, or debit cards.

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Additional security

There is no credit card involved when paying through Affirm.

As you do not have to provide a credit card number for any purchase made through Affirm, you will benefit from an additional layer of protection against fraud or identity theft.

Mobile connectivity

Affirm offers an easy-to-use mobile app that allows you to track your payments and manage your account from anywhere.

 

No late fee

In their efforts to keep your charges down, Affirm has removed all late fees on clients if they miss a payment.

The customer may still get charged interest on the unpaid outstanding balance.

It is more challenging to get another Affirm loan if you miss payments regularly.

This could also harm your credit score.

 

No prepayment penalties

Most credit cards and loan issuers charge a penalty on clients for settling their credit early.

This doesn’t make sense from the customer’s perspective.

Affirm credit charges nothing extra for paying off your loan early.

If your circumstances change and you want to settle the credit early, you can do so with Affirm credit with no additional charges.

 

Soft credit pull

Affirm tests your credit score just like any other lender when assessing your application for approval.

The significant difference is that Affirm financing will not hurt your credit score, whether you get approved or not.

This is because the company uses a soft credit check, which will not show up on your credit statement.