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: Klarna typically only runs a soft credit check to determine your eligibility. However, it may require a hard check for its monthly financing option.
• Some benefits require a fee: You’ll have to pay $4.99 a month to use the Klarna Card. Klarna Plus (an optional loyalty program) costs $7.99 a month.
• 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.

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.

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.

Note that Klarna may require a service fee when using the app or card to finance purchases — one of the benefits of Klarna Plus is waived service fees. However, those fees are not transparent.

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.

*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)
• Drugs or alcohol

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.

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).

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.