If you’re considering a small personal loan to finance your next purchase, this Affirm review is for you.
The startup finance company promises to make personal finance decisions faster, easier and smarter for consumers. So we bought a Macbook using Affirm last week to see: is Affirm legit? Read on to see our first-hand experience with Affirm.
What Is Affirm?
Whether you’re dreaming of a well-deserved vacation or just want to pamper yourself with a purchase, an Affirm account could give you instant buying power.
Affirm offers transparent, real-time loans for everything from designer clothing and travel expenses to prescription eyewear and more. The company was founded by Max Levchin, who was one of the original co-founders of PayPal. He’s also a co-founder for SciFi VC and Glow, and he operates the HVF innovation lab in San Francisco, California.
Levchin and his co-founders designed Affirm personal loans to give consumers an alternative to expensive credit card debt. If you use credit cards or other interest-accruing funding options to finance the occasional big purchase, the Affirm app could save you money in the long term.
You may also benefit from Affirm loans if you’re ready to accelerate your business or elevate your lifestyle. You may not have enough cash on hand to finance your purchases upfront, but perhaps you can afford to keep up with a payment plan to make those dreams happen without delay.
A colleague of mine needed a laptop, so he opted to buy a laptop to help us write a better Affirm review for you.
How Does Affirm Work?
Affirm offers real-time personal loans issued at the point of sale. That’s one of the primary factors distinguishing it from a credit card.
Instead of establishing a line of credit and then spending money at multiple stores over time, you apply for a set loan amount specific to one purchase. Note: you can use Affirm by shopping directly with one of their retail partners or you can use the Affirm app to shop anywhere.
So, how does Affirm work exactly? What are the steps to getting an Affirm loan? Read this rest of our Affim review to see our experience with them…
1. Create your Affirm account
2. Find a participating retailer
They did (see order summary below).
Pictured: participating retailers offer an option to checkout with Affirm, like this one.
You can also use the app or Affirm website to shop for products, services and travel arrangements offered by other retailers, both in or outside of their partnership network. But you need to know the product, price and retailer before you can apply for an Affirm loan.
3. Apply for a loan in real time.
Once you’re ready to purchase, you should see an option to apply via the store or on the Affirm website or app. It should look like this:
Pictured: check if you qualify with Affirm.
You do authorize Affirm to perform a soft credit check before you’re approved. This isn’t a hard inquiry, so it won’t impact your credit score. They simply need to look at your credit report to determine your creditworthiness at the time of application.
You will clearly see what interest rate is offered by that retailer. Hit the button to apply for a loan, entering your desired loan amount. You should receive an approval or denial within seconds.
4. Choose your loan terms.
If approved for an Affirm loan, you’ll have at least two or three payment plan options. All loan offers tell you the following information:
- Amount of the loan
- Number of months for repayment
- Monthly payment amount
- Due date for payments
- Interest rate
Affirm loans are never based on compounding interest. See below for a breakdown of terms.
Pictured: Affirm loan terms are transparent.
There are no late fees, prepayment fees or hidden costs. And you will know the complete cost of your loan before you accept the terms. Most loan offers extend for three, six or 12 months. Longer terms may apply at retailers.
Pictured: Affirm loan dashboard post-sale.
You decide the terms of your loan. You’re allowed to pay higher monthly payments in order to pay the loan off quickly or accept lower payments for a longer loan. This is a big plus.
Note: keep your current financial position and future money goals in mind as you make that personal finance decision.
Also, note that all Affirm loans are offered by Cross River Bank, which is a member of the FDIC. Note: you can easily pay your Affirm loan amount every month by learning how to earn money online or by a few of the best money making apps (like these apps to make money for PayPal use).
5. Complete your Affirm purchase
Once you select a payment plan and accept your loan, you complete the purchase just as you would with any other payment type.
Pictured: the laptop arrived in 2-3 days.
Affirm will issue you a virtual debit card on the spot, and it’s only good for that one purchase.
Enter the card number and expiration date to process your transaction and receive your product immediately or upon shipment, depending on the purchase method and store.
You can monitor your payments through the Affirm app or website. You’ll see a list of all future payments, and they will check off as they’re paid. You can pay off all future payments at once with no prepayment fee.
The Fine Print
This part of the Affirm review is the most important, because the fine print is where the Affirm loan terms are.
And for this Affirm review, we discovered there’s a lot to love about Affirm. Your interest rate that you receive depends on your chosen retailer and the details of your credit report. Many retailers are currently offering 0% interest, but that may not last as Affirm transitions from a startup to an established provider of personal loans.
All Affirm loan offers have the same terms, with none of the following:
- Deferred interest
- Compounding interest
- Prepayment penalties
- Late fees
- Annual fees
- Hidden fees
Qualify for Affirm Loan
You may not need perfect credit to qualify for an Affirm loan, but your credit report should reflect your ability to repay according to the terms of the loan. In an October 2017 press release, Affirm stated that their business policy is to provide loans to consumers with the ability to repay their loans in full and on time. That may mean denials for anyone with bad credit or a report riddled with missed payments and closed accounts.
If you don’t have the best credit, you may also receive loan offers for a limited loan amount. For instance, you may receive an approval for a purchase of $300 while someone with better credit is approved for a $1,000+.
Affirm Loan Downsides
We’ve talked a lot about the advantages of using an Affirm loan and how the program is different from other financing options. Now, let’s cover a few potential downsides to Affirm personal loans.
- Financing with Affirm may make store returns more complicated. You start the process by returning the merchandise to the retailer. The retailer must then process the refund with Affirm. It can take some time for Affirm to complete the process with your account.
- You’re not guaranteed to receive approval for your full requested loan amount. In that case, you may need to make a down payment in order to complete the purchase.
- Affirm may take additional steps to verify your identity before approving your personal loan. You won’t receive real-time approval if that applies to your application.
- Many consumers have reported that Affirm doesn’t always report timely payments to the credit bureaus. That’s often frustrating for consumers trying to rebuild their credit.
- Each loan is based on an individual purchase, so you don’t receive a rolling line of credit.
There are some complaints that Affirm requests higher interest rates than some consumers might receive from other lenders. Keep in mind that Affirm doesn’t work with hidden fees, never charges late fees and doesn’t compound interest over time. When you look closely at other personal loans and credit cards, you may find that Affirm is the more affordable option when all terms are considered.
Affirm Review Summary
Is Affirm legit? Is Affirm safe? Yes, absolutely. Affirm is a 100% legitimate financing option for consumers–even with decent credit.
The company offers short loan terms, so you don’t carry the debt for years as you would with a credit card purchase. You also pay a flat amount in interest, so it doesn’t compound over time and increase the total cost of your purchase. It’s an honest payment plan for one purchase rather than a rolling debt that never goes away.
There are now more than 1,000 retailers partnering with affirm, including Wayfair, Expedia, Dell and Casper. As the personal finance startup becomes a more established company, that network is likely to grow.
Correction: June 19th 2019. An earlier version of this article incorrectly stated you can only use your “Affirm account to purchase from retailers within the Affirm partnership network.” But, you can use Affirm by shopping directly with one of their retail partners or you can use the Affirm app to shop anywhere.
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