“Will that be cash, credit card or personal loan?”
The next time you shop online, you may be offered a new way to pay — a personal loan with fixed monthly payments. Instead of using cash or plastic at checkout, you would provide some personal information and get a loan in minutes.
Got your eye on a new living room set at Wayfair? Or maybe you’re booking your honeymoon on Expedia. Increasingly, shoppers at these sites and others are encountering payment options from third-party lending companies like Affirm, Bread, Klarna and Acima Credit.
Currently, such “point-of-sale” loans appear mostly on websites for big-ticket purchases, like mattresses, furniture, electronics or musical instruments. But they’re expanding into other retail areas — and plan to partner with brick-and-mortar stores.
Lyst, an online clothing store carrying brands such as Burberry, Marc Jacobs and J. Crew, offers loans through Klarna. And Walmart is considering checkout loans from Affirm for items above $200, according to a report by the Wall Street Journal.
The loans are enticing, with low monthly payments and a checkout process that’s as quick as applying for a store credit card. But there are downsides, such as high interest rates for people new to credit and the temptation to overspend, says Byrke Sestok, a certified financial planner at New York-based Rightirement Wealth Partners.