What You Need To Know About Point-of-Sale Loan
Point-of-Sale (POS) loan gives users the opportunity to buy now and pay later. Since online shopping has become the order-of-the-day, especially since the wake of the pandemic, there are now new ways being uncovered to help make the lives of people better. And the opportunity to buy now and pay later is one of the ways!
You can purchase electronics, clothing, wellness products, furniture, toys, and just about anything else you ever want from home. And that’s even if you do not have the cash right now.
If you have been doing your regular shopping online lately, you may have discovered a small logo close to the payment option at checkout, which allows you to apply for a monthly payment plan or to “buy now, pay later.” The options you see there are called point of sale loans.
One interesting thing about this is that they seem to be used almost everywhere now. Some of the companies making use of this do not even request interest on the loans, while others have very low-interest rates. So, if you need a product urgently but need extra time to pay for it, these platforms are really great for consideration. Affirm, Afterpay, and Klarna are great examples.
POS loans however come with their own terms and conditions, just as other loan-offering conditions. So, you must check it out before you sign up.
How To Get A Point-Of-Sale Loan
To get started with acquiring a point-of-sale loan, you’ll be required to create an account with the company. Your basic personal information would be required after you upon creation of account. These would include your full name, address, date of birth, and possibly your Social Security number among others.
After this, breakdown of your payment plan options will be revealed with divisions of your balance by installments. And a spread out over a specific repayment term agreed upon and with your first installment due at checkout.
For instance, you are provided with a $100 loan over a repayment plan of two months with no interest, and due every two weeks, you’ll have four installments plan of $25 to cover for every two weeks for eight weeks.
Once you filling in your payment information and billing address, and consent to the provided terms and conditions, your first payment would be charged on your credit or debit card and also at the end of every two weeks, till you have fully completed the loan payment.
Getting the process started doesn’t long. It takes just a few minutes. Your approval will come almost instant. Depends on factor such as the finance institution, interest rates, and late fees which may also be applied.
Are Point-of-Sale Loans good option?
There are a number of reasons you may want to consider POS loans. One can’t generally say if it is good or bad, it all depends on the situation in which you are considering it. You may want to checkout for a low interest or zero interest POS loan opportunity if you have a very important purchase you will not be able to make total payment for and the installments suits your budget.
Here are more reasons you may want to consider POS loans:
- You are fresh to credit – Even though some lenders will look at your credit score, many of the institutions that provides point-of-sale financing have fewer rigid criteria in making decisions regarding loan approval, as they largely focus on the funds available on your debit or credit card, the price of your purchase, and repayment term.
- You will not pay much interest – Even though some retailers provide users with zero-interest rates, you are not likely to find this always. Companies like Affirm have interest rates as high as 30%. So, it is important that you consider these interest rates before settling for a loan.
- You are having a huge one-time purchase – If you are purchasing a new huge household item such as a piece of furniture, mattress, or some others and would rather pay at a fixed rate every month, then, you can enjoy the benefit of using Point-of-sale loans.
- You can afford the payments – Many people overspend because they find it easy to use point-of-sale financing. It isn’t a wise decision to take a loan for nonessential purchases, but be sure you can conveniently afford the payments.
Where Can You Get A POS loan?
The loan provider is most times determined by where you shop and the companies with the biggest presence are Klarna, Afterpay, and Affirm. This is different from other types of loans where you do not necessarily have to shop around for the right lender for a point-of-sale loan.
Afterpay partners with big retailers such as Gap, Old Navy, and Bed Bath & Beyond that provides customers with a straightforward model. But then, each of the retailers requires that you make four interest-free installments which are due every fourteen days, and are divided equally, even though you may be required to pay higher fees on your first payment, especially if you make a huge purchase. And you’ll have no extra fees once you make timely payments. But anything after 10 days of your due date, will attract a maximum fee of $8 extra.
Affirm partners with wellness retailers such as Mirror, Peloton, and Casper and permits negotiation of loan eligibility and interests with individual retailer, which means that where you shop would determine the change in your repayment term options and interest rates. Some of the company’s partners charge zero interest while others charge 30% APR. But Affirm doesn’t charge late fees on loan repayments.
Klarna focuses largely on its mobile app experience. And you can shop at stores such Foot Locker, Sephora, and Macy as soon as you download the app. You’ll make use of the payment plan provided with balance divided into four payments with no interest rate. But once you fail to make payments on two attempts, you’ll be subjected to a late fee charge of $7.
POS loan Alternatives
You may want to consider making research on the yearly percentage rates that could be open to you on a personal loan if you’re making a huge purchase. Like you’ll be able to see your rates with the point-of-sale loan, when you pre-qualify with a lender without it affecting your credit.
And if you can qualify for a lower APR on a personal loan than you do on a point-of-sale loan, going for the person would be a better option. You could also qualify for a 0% APR credit card with good credit or an excellent one.
There are cards that offer customers an introductory period of about 18 months without charging interest on their purchases. Privileges for access to reward programs or sign-up bonuses may also be offered.
So, if you are stuck with a point-of-sale offering a similar term with fees and interests connected, then going for a 0% card should be better considered.