2023 Klarna Buy Now, Pay Later Review
Klarna is a buy now, pay later (BNPL) platform that allows consumers to finance everyday purchases.
Many online businesses and brick-and-mortar retail stores offer Klarna at checkout as a way to break down your purchase into smaller payments. The company also offers a one-time-use card that you can use at any online retailers that accept prepaid Visa cards. Klarna works primarily through a free mobile app or web browser extension.
- Several plans to choose from: Eligible borrowers have up to four financing plans to choose from: Pay in 4 installments, Pay in 30 days, financing over six to 24 months and the Klarna Card.
- Low (or no) down payments: With the exception of Pay in 4, borrowers don’t have to put any money down to purchase an item. When using Pay in 4, you’ll need to pay 25% of your purchase up front.
- Can be used almost everywhere: Klarna issues one-time virtual cards so you can make online purchases anywhere that accepts prepaid Visa.
- Almost always 0% interest: Other than the Finance option, all plans require interest-free payments. However, be aware of fees if you miss a payment due date.
- Usually no hard credit checks: Shoppers using Pay in 4, Pay in 30 or the Klarna Card don’t need to submit to a hard credit check.
- Klarna rewards and mobile app: Klarna users can rack up points for retailer discounts through its rewards program. The Klarna mobile app also has a comparison shopping platform to help you find the best deals.
- Best for digital-savvy borrowers with less-than-stellar credit and disciplined spending habits: If you aren’t comfortable using a mobile app or browser extension, Klarna could be frustrating. Otherwise, shoppers who can restrain themselves from overspending and don’t qualify for a 0% intro APR credit card might want to give Klarna a try.
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Klarna pros and cons
The idea behind buy now, pay later is similar across companies, but each has its own unique perks and drawbacks. Here’s what we found during our Klarna review.
| Pros | Cons |
|---|---|
No interest on most plans Instant financing approval No hard credit check for most types of financing | Late fees can stack up quickly Borrower requirements and credit limits aren’t transparent May find yourself in over your head if BNPL is not used responsibly |
With its instant financing approval and 0% interest, Klarna can make your purchases more affordable by spreading out the cost across several smaller payments. But be careful — if you make multiple Klarna purchases and fail to pay on time (every time), you may be overwhelmed by multiple $7 late payment fees.
Klarna financing options
As our economy struggles, more Americans are turning to BNPL. If you’re considering Klarna, understanding the company’s financing options could be crucial to avoiding a debt cycle.
| Klarna BNPL option | Financing term | Amount due at time of purchase | Next payment due | Interest | Fees |
|---|---|---|---|---|---|
| Pay in 4 | 6 weeks | 25% of the total amount | 25% required two weeks later, and in two week increments thereafter | 0% | $7 late payment fee, and total fees cannot exceed 25% of purchase amount |
| Pay in 30 | 30 days | $0 | Total amount required 30 days from purchase or shipping date | 0% | $27 returned payment fee |
| Financing | Up to 24 months | $0 | End of the month or on the same day each month (borrower’s choice) | 0% - 29.99% | Up to $35 for late and returned payments for borrowers using Klarna as revolving credit |
| Klarna Card* | 6 weeks | $0 | 25% of total purchase due on the second Friday of each month | 0% | $4.99 per month and $7 late payment fee |
*Only available for select borrowers already using the Klarna platform.
Klarna requirements
U.S. citizens that are at least 18, have a bank account and can receive texts may be eligible for Klarna. Applicants must also have a “positive credit history.” Other than that, requirements are vague.
For most types of financing, the company performs a soft credit check. Many borrowers with fair or good credit might be approved for Klarna — at least for small dollar purchases.
Every time you use Klarna, it evaluates your eligibility based on your Klarna payment and borrowing history. You might be creditworthy for some items but not others. For example, you could be approved to finance a $150 pair of sneakers but not a $1,000 patio furniture set.
Due to company guidelines, you can’t use Klarna for some purchases, including:
- Bill or rent payments
- Gift cards
- Governmental agencies
- Medical care
- Gambling (online or in-person)
- Ridesharing
- Subscription services
- Drugs or alcohol
- NFTs
As a BNPL company, Klarna may not be right for your borrowing needs. If that’s the case, a personal loan could be a more suitable option. Be sure to shop around for a lender that helps you meet your financial goals and can offer you the best-fitting rates, terms and amounts.
Best personal loan options for…
How to finance with Klarna
Download the app or browser extension
To apply for Klarna financing, first you need to download the Klarna app. Then, you’ll be prompted to create an account. Here, you’ll provide some basic personal information along with your payment details (either a debit, credit or checking account).
Tip
Connecting your bank account instead of a debit or credit card could help boost your approval odds for larger purchases.
Start shopping
Once you’re signed up, you can start shopping. The mobile app and browser extension will display your Purchase Power (your estimated spending limit). Your Purchase Power will fluctuate based on your Klarna history, where you’re shopping and the financing option you choose.
You can shop directly through the Klarna mobile app, on your desktop and in person at participating brick-and-mortar retailers. You can find a list of retailers on Klarna’s website or mobile app.
Pay using Klarna
Online shopping
When you’re ready to check out, choose “credit card” as your payment option. If Klarna is available, you should see a “pay with Klarna” option.
Once you’ve hit “pay with Klarna,” the app or web browser will prompt you to key in the amount you’d like to finance and to choose a payment plan (Pay in 4 or Pay in 30, for instance). Then, Klarna will create a “ghost card,” a one-time-use virtual card for you to make your purchase.
In-store shopping
You can use Klarna for in-store shopping as long as your cellphone has Google Pay or Apple Pay.
First, click the “in-store” button on your mobile app. Then, key in the amount you’d like to spend with Klarna. The app will then create a ghost card that you’ll need to add to Google or Apple Pay. When checking out, select the ghost Klarna card in Google Pay or Apple Pay and pay as normal.
Applying for Klarna Financing
Using Klarna Financing instead of the Pay in 4 or Pay in 30 options requires a few extra steps. Follow the same procedure detailed above, but choose Klarna Financing as your payment option. Then, pick your financing terms (including your interest rate and repayment timeline) and fill out the application. Once completed, you’ll get an instant approval decision.
Pay your first Klarna bill
Your payments are automatically withdrawn from the account you connected to the Klarna mobile app. You can pay early, though, with no prepayment penalties. To do so, navigate to the “payments” tab on the app and follow the prompts.
How Klarna compares to other BNPL companies
Even if you believe Klarna aligns with your payment preferences, it never hurts to shop around and research the best BNPL sites and apps. Here’s how Klarna stacks up.
| Klarna | Afterpay | Affirm | |
|---|---|---|---|
| Minimum credit score | Not disclosed | Not disclosed | Not disclosed |
| APRs | 7.99% to 29.99% | 0.00% to 35.99% | 0.00% to 36.00% |
| Loan amounts | Not disclosed | Not disclosed | Not disclosed |
| Repayment term | Six weeks to 24 months | Six weeks to 12 months | Six weeks to 12 months |
| Late fees | $7 to $35 | Orders below $40: 25% of the original order amount Order above $40: $10, with an additional $7 if balance is unpaid after seven days. Late fees will continue until they reach a $68 maximum limit | None |
| Funding timeline | Instant | Instant | Instant |
| Customer service | 24/7 chat and phone help | Available daily, can only contact via web form | Daily chat and phone help |
| Bottom line | Klarna has the longest repayment terms of these lenders | Afterpay has confusing late fee rules | Affirm has no late fees, but remember that missed payments will affect your credit score |
Frequently asked questions
Yes — overall, Klarna is trustworthy. It was founded in 2005 and according to the company, it’s served 150 million consumers at 500,000 merchants in 45 countries.
However, the BNPL model is no stranger to controversy. BNPL apps are very easy to use and eligibility requirements are loose. A 2022 LendingTree survey found that 70% of BNPL consumers say they’ve spent more than intended than if they’d paid for their purchases up front.
Many BNPL companies (including Klarna) only perform a soft credit check for most types of financing. Soft credit checks don’t negatively impact your credit score — however, if you default on your loan, Klarna may report that to the credit bureaus, likely driving down your credit score. Further, most BNPL companies don’t report on-time payments — so if you’re looking to build credit, you may want to explore other options.
Like with any personal finance option, Klarna may be a good idea for some, but for not others. BNPL may not be inherently bad, but you could end up in a debt cycle if you repeatedly finance small-dollar items. Check out some BNPL alternatives before deciding if Klarna is right for you.