Why you should never use Affirm or Afterpay.

So what is Affirm / Afterpay
Affirm is part of a wave of companies that offer “point-of-sale” financing, which means you will run across it when you are ready to buy something from a retailer. Affirm offers financing for Walmart, furniture store Wayfair, mattress store Casper, travel site Expedia, and more than 2,000 other retailers.

Will it affect my credit?
Affirm runs a real-time, soft inquiry of your credit and decides whether or not to approve you for a loan amount that matches the price of the item you’re buying.

However, proceeding with an Affirm loan may impact your score, since the company reports most of its loans and payments to the credit bureau Experian. Each Affirm loan you get shows up as a separate loan on your credit report.

Now Why You Should Never Use It

1) If you cant, afford to pay with cash, you don’t need it.
If you are using, affirm you are blatantly spending money you don’t have. And waiting until that next paycheck comes in to make that payment. And with 63% of Americans living paycheck to paycheck, do you really want to add more debt for something you don’t need? You will continue to be broke now and be broke later. And like they say, Broke people love payments, rich people love profits.

2) The APR is too high.
Affirm offers APR from 0-30%. While going into more consumer debt is already dumb, even dumber is going into consumer debt at a high Apr. While average credit card APRs around 15%. Imagine doubling that just for one item.

3) They make you think that you will pay 0% APR, but that is not always the case. If you read the details, it says 0% apr for qualified shoppers. But what qualifies shoppers?

Recently my kids came to me and told me that they wanted to buy something online. I asked them what it was, and it turned out to be a significant purchase. I asked them, how will they buy it since their savings were not enough?

They told me about a new app which allowed them to “buy now, pay later”. I did not like that idea for a number of reasons.

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Affirm, Klarna, and Afterpay – in just 5 years, these 3 companies have popularized a new form of consumer spending called Buy Now Pay Later. BNPL is a type of short-term unsecured personal loan where instead of paying the full price upfront at checkout, you can defer the cost of any item by splitting the payment into smaller installments over time. If you want to spread payments out over a longer period of time to make the installments even smaller, you’ll have to pay interest. And if you miss a payment using BNPL, there are penalties with late fees, collections, and lowered credit score.

What Klarna, Affirm, and Afterpay have done is they’ve broadened the purpose of short-term unsecured personal loans from large one-time essentials into everyday, impulse, and splurge purchases. They’ve made it easy for anyone to borrow money, simplifying a historically opaque, time-consuming process of applications and manual underwriting into a scalable UX that provides instant credit in just a few taps. Most of all, there’s instant gratification. With Affirm, Klarna, or Afterpay, you get your order delivered right away on or before your first payment.

Putting aside fundamentals, BNPL itself is controversial. To critics and regulators around the world, it promotes irresponsible spending and enables overconsumption. In this episode, we’ll explore the business model of BNPL, its eerie similarities to the 2008 subprime mortgage crisis, and why that matters now more than ever in the coming recession.

�� Audio Editing & Mixing Credits: Sonalf

0:00 The Rise of Buy Now, Pay Later
6:01 Generational Tipping Point
11:58 House of Mirrors
19:32 Castles in the Sky
24:12 The BNPL Flywheel
30:43 Of Their Own Accord
36:47 Boiling Frogs

Buy now, pay later companies have been cementing themselves as a top way to pay for your purchases – allowing customers to pay less right away, but still get their items up front, and then pay over time with no interest. And on the surface, it seems great! Who wouldn’t like the idea of buying the things you want for less money? Then being able to pay it off over a few months with no interest? Well, that’s not really the full story – there’s more to buy now, pay later, or BNPL than people think. Today we’re going to break down the sneaky way companies like AfterPay, Affirm and Klarna actually work, and how it’s become even more dangerous for people.

0:00 Buy now, pay later companies have a catch
1:27 BNPL companies charge high fees
4:09 The BNPL companies and stores benefit most…
6:21 …and most consumers don’t use BNPL in a way that benefits them
8:36 And now BNPL companies are even more dangerous

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