Afterpay vs Klarna: Battle Between Two Most Popular BNPL Services in Australia

Apps that allow users to buy now and pay later (BNPL) are growing in popularity as a way for customers to make purchases and pay for them over time without paying interest. Klarna and Afterpay, two of the most well-liked BNPL apps, are supported by well-known online retailers. 

Based on the features and advantages of each app, we’ll analyse these two financing choices in this post to assist you in selecting the one that is best for you. Between Afterpay and Klarna, Klarna is the best buy now, pay later app in our opinion. It has twice as many stores in its marketplace, more financing alternatives, and the ability to generate virtual card numbers that may be used anywhere Visa is accepted.

Afterpay vs. Klarna – Terms of Use 

Both of these buy now, pay later apps to let users obtain their purchases right away and spread out their payments over four equal payments. Following approval, you are able to make purchases from participating businesses and make interest-free payments over time. You’ll never pay more than the amount of your purchase as long as you pay your bills on time.

You will make a 25% down payment at the time of your Klarna purchase and the remaining balance over the next six weeks. Until the sum is paid in full, an additional 25% will be charged every two weeks to your payment method (debit or credit card). The bank account that you’ve connected to your BNPL app account is often how you make payments.

The smallest buy amount with Klarna is $10, while the highest purchase amount is limited by an underwriting limit. You can request specific purchases above your credit limit but not an increase in your credit limit. It will approve you for a larger buy if its underwriting engine can.

Although the Afterpay store does not have a minimum purchase requirement, the merchants it partners with might. The Afterpay app shows your maximum purchase amount, which is dependent on your individual profile. The maximum pre-approval amount is provided by the Afterpay app, however, pre-approval does not ensure that your transaction will be approved at checkout.

Credit Requirements Between Klarna and Afterpay

Every time a lender gives you financing approval, they often pull your credit report. Pay-later services are available. act differently because several do not demand a credit investigation at all. Most also provide short-term loans with no hard credit checks than a light draw.

The mild credit query that Klarna makes for its pay-in-four service does not lower your credit score. It is determined whether you pay your payments on time using this tacit query. Depending on the length of the loan, Klarna may demand a rigorous credit check. Similar to the majority of lenders, the credit bureaus may be notified of your default if your obligation is not repaid.

When you open an account or make a purchase, Afterpay does not run a credit check. Furthermore, it won’t report any late payments to the credit bureaus if you ever make them. For those with a history of bad credit or those who are just starting to establish credit, this is a fantastic alternative.

Also Read: Detailed Guide for LatitudePay vs Afterpay: Which is Better?

Afterpay vs. Klarna – Interest and Fees

As long as you pay all of your planned installments on time, the majority buy now, pay later services don’t impose interest or fees. The pay-in-four services offered by Klarna and Afterpay are no exception. Both services are free, and the pay-in-four financing has no interest.

With Klarna’s shops, you can be charged interest if you select a longer repayment term. Interest rates for these loans range from 0% to 24.99%, depending on the merchant.

Klarna vs. Afterpay – Mobile App

Both Klarna and Afterpay offer mobile apps to shop, view your account, and pay your bills. Each offers different features to encourage shopping and enhance the user experience. The apps are available for both iOS and Android mobile devices.

Klarna’s mobile app (iOS, Android) curates personalised wish lists based on your preferences, favourites, and past purchases. You can even set alerts to be notified of price drops on your saved items or browse exclusive deals. Customers can track their packages and initiate returns to avoid paying for items that have been returned to the store.

Beyond shopping at over 200,000 retailers in the Klarna app, you can also create a one-time card number that enables you to make purchases anywhere Visa is accepted. While many buy now, pay later services are limited to retailers within their ecosystem, Klarna allows customers to shop online at any U.S. website with a virtual card number to buy now and pay later.

The Afterpay mobile app (iOS, Android) allows customers to browse and make purchases from over 85,000 retailers. You can also make purchases in person at some of the app’s retailers. You may view your purchase history and upcoming payments within the app and change your preferred payment method at any time. Upcoming payments can also be paid early within the app.

Klarna vs. Afterpay – Other Products

While Afterpay does not currently offer additional financing options, Klarna does. With Klarna, in addition to pay-in-four transactions, you can also take advantage of pay-in-30 and six-month financing.

Pay-in-30 from Klarna allows you to buy items today, return what you don’t want, and pay only for what you keep. There are no fees or interest on these purchases as long as you pay the entire balance within 30 days. Klarna also offers six-month financing in partnership with WebBank to offer flexible payments on larger purchases.

One of the unique features of Klarna is that you earn rewards on every purchase. Those rewards can be redeemed for exclusive discounts on future purchases.

Also Read: Afterpay vs Openpa – Take the Better Option for Big Savings

How do Klarna and Afterpay work?

These buy now, pay later services allow you to buy today from their network of merchants, then pay over time without incurring interest. You’ll pay 25% of your purchase amount on the date of your purchase, then 25% every two weeks. This means that your purchase will be paid off within six weeks of your transaction date. They do not charge interest or fees as long as payments are made on time. Instead, they earn money on every transaction from the merchants, similar to how a credit card issuer earns revenue.

What is the minimum credit score for Afterpay and Klarna?

Klarna and Afterpay do not disclose minimum credit score requirements. Klarna only performs a soft inquiry, while Afterpay does not check customer credit scores at all. Most transactions require a 25% down payment and subsequent payments of 25% every two weeks until paid off. Because these loans are short-term in nature, buy now, pay later services like Klarna and Afterpay are willing to work with customers who have bad credit or minimal credit experience.

Can Klarna or Afterpay hurt your credit?

As long as you make your payments on time, Klarna and Afterpay will not hurt your credit. Klarna does a soft credit check for its pay-in-four service, so its inquiry will not affect your credit score. If you need a longer-term loan from Klarna, then it may perform a hard inquiry, which will report on your credit report and may reduce your score by a few points.

Afterpay does not check your credit at all. It only requests basic personal information, such as name, contact information, date of birth, and credit or debit card number. However, if you miss payments and do not pay for your purchases, both buy now, pay later services have the option to report your delinquent payments to the credit bureaus.

Are Klarna and Afterpay safe to use?

Yes, buy now, pay later services like Klarna and Afterpay are safe to use. They are legitimate companies that make it easier for consumers to afford their purchases by splitting transactions into four equal payments. Because this type of financing is relatively easy to get approved for, the danger is that consumers will make purchases that they shouldn’t and, ultimately, spend more than they would otherwise.

Methodology

To determine which is the better buy now pay later app between Klarna vs. Afterpay, we analyzed these services based on a variety of features. We researched their financing options, participating retailers, interest rates and fees, and impact on credit score to determine a winner. When consumers consider using buy now, pay later services, they want a low-cost provider that is widely accepted and makes payments more affordable.

Pay Later Alligator is one of the best online stores in Australia. They offer various ranges of BNPL services from Afterpay stores in Australia. We offer easy checkout and interest-free installments so our customers can choose from a variety of BNPL plans.