Recently, there has been an exponential rise in the adoption of the ‘Buy Now Pay Later’ payment model. This alternative payment option is being integrated across all major e-commerce platforms around the globe. One such program, that has generated quite a buzz, has been Afterpay. Allowing customers to take home products they haven’t completely paid for, is making Afterpay one of the most popular payment alternatives among buyers. However, not many are well-informed about how Afterpay works or the kinds of benefits it provides. Does Afterpay check credit? Read on to find out.
What is Afterpay?
Just like most ‘Buy Now Pay Later payment options, Afterpay allows you to split the cost of the purchase into smaller, easy installments, which you can then pay over an extended period of time. In this way, you don’t have to pay the entire cost of the product in full, at once. This also allows you to afford big-ticket items without having to save months on end.
What are the requirements of using Afterpay?
Afterpay, essentially, is a digital payment platform. It allows online customers to purchase products without having to pay the full price of the product upfront. Enabling buyers to delay their payment, Afterpay makes certain products affordable for customers. There are certain requirements that customers have to fulfill to use Afterpay.
- A buyer should be over the age of 18, to sign up for a free account on Afterpay.
- In order to take advantage of Afterpay, a buyer has to shop on e-commerce websites or retailers that support Afterpay.
- The buyer must also hold an eligible debit or credit card.
- Certain e-commerce stores place a particular shopping threshold that buyers have to cross. It means that they have to buy products up to a certain bill amount, to avail the facility of Afterpay.
- Customers are also required to pay at least 1/4th of the total cost upfront at downpayment.
How does Afterpay work?
Several e-commerce platforms have integrated Afterpay in their payment process so that customers can easily pay through installments after buying from the platforms. All you have to do is pick the payment option- Afterpay, at the checkout stage, and you are good to go.
By choosing Afterpay, you would be buying stuff just as usual. Your purchase would be shipped to you as it does normally, the only difference would be that you will be paying the total price of the products, over an extended period of six weeks. The process is pretty seamless:
- You have to make an account on Afterpay and do some shopping.
- Your payments would be charged to your credit or debit card every two weeks for the next eight weeks.
- You will be paying the total price in four equal installments.
- Afterpay will send you notifications via text messages, prior to fund withdrawal, every time.
How does Afterpay differ from Credit card loans?
Unlike credit cards, the entire process at Afterpay has been automated. Hence, funds are automatically deducted when your installment is due for payment. You don’t have to make a schedule and follow it to avoid delay or missing installments like you would have to do in the case of a credit card.
Does Afterpay check credit?
So the short answer would be NO. Afterpay does not check your credit before providing you approval for the loan. Moreover, Afterpay also does not charge you with any interest. However, there are certain things that you should be aware of.
- Afterpay can check your credit score
Afterpay does retain the right to perform a check on your credit if it suspects that there is some malicious activity taking place on your account. In that case, Afterpay can inform credit rating agencies, which can lead to a black mark being put across your record. Malicious activities include any missed payments, or defaults, or chargebacks. It is similar to any other credit source in that regard.
- Fee for late payments
In the event that you are unable to make your payments on time, you would be subjected to a late fee. Even though the maximum late fee can go per day is limited to 1/4th of the price of the product, it can still add up to a substantial amount, quite quickly, if not paid. Hence, Afterpay should only be used if you are confident in your ability to pay off the installments on time.
- Not everyone gets approved for Afterpay loans
Another thing to remember is that not everybody gets approval for an Afterpay loan. Moreover, in some cases, even if customers do get approval, they are not able to acquire the entire amount that they requested initially.
There is one distinct upside to using Afterpay, which is that you can use it to build a positive and reliable credit history for yourself. If you are confident that you can pay all your installments on time, then the question -‘ does Afterpay check credit’ won’t carry much significance. You also don’t have to worry about any late fees or interest charges. Hence, if you are disciplined in your payments, then Afterpay could be a great way of neutralizing your credit rating.