How Does Affirm Work?

What is Affirm doing that draws so much attention from the millennial user base? It’s hard to say for sure, but the app is definitely one of the most popular buy-now, pay-later solutions in the US right now. The BNPL industry as a whole has been on the rise over the past few years, allowing Affirm to solidify its position as a major player in this market.

But how does Affirm work? In this article, we’ll explain how the app functions, its credit limits, and the types of purchases you can make with it.

What Does Affirm Do?

BNLP services seem to be a dime a dozen these days! The secret behind the success of this model is that such apps don’t charge interest or additional fees, getting their profits from the merchants instead (who get to enjoy increased sales in return).

Affirm is among the most downloaded and used applications in its category. It offers a convenient way to finance purchases at its partner merchants. When you check out, you can use the “Pay in 4” service or split your payment into several monthly installments.

With Affirm, you can apply for short-term financing and get approved within seconds. After a small initial payment, you’ll be given a few financing plans to choose from, ranging from 3 to 60 months. The exact repayment term depends on the merchant, the purchase total, and your creditworthiness.

What can you use Affirm for? You can shop for clothing, shoes, accessories, beauty and healthcare products, gadgets, wedding rings, and more. You can even get a loan for a vacation or a concert ticket. The service even allows customers to finance a car from partner dealerships.

Credit Limits

Affirm doesn’t have a pre-set credit limit. Instead, the amount a user can access is determined on an individual basis. Keep in mind that even if your limit is high enough to completely cover your purchase, there may still be a required down payment at checkout.

Your Affirm minimum is determined during the application process. The service evaluates your financial profile to determine eligibility, taking into account factors like:

• Credit history. A strong credit profile improves your chances of approval or getting an Affirm credit increase.
• Payment History. If you’ve used Affirm before and paid on time, the application is likely to boost your credit limit.
• Account maintenance. The service also considers how long you have been an Affirm customer.
• Merchant Policies. The platform’s partners may set additional financing limits for their products.

What Can You Use Affirm For?

Affirm can be used for point-of-sale installment financing at checkout, both online and in-store, across a long list of partner retailers. Here’s a quick look at the brands and categories that take Affirm:

1. Electronics and Technology.

Affirm allows customers to purchase high-end gadgets and electronics without paying upfront, making it ideal for financing a costly PC upgrade or the newest smartphone model. You can use the service to buy devices from Apple, Samsung, and Best Buy.

2. Furniture and Home Goods.

Whether you’re looking to completely redecorate a room or get a single bedside table, Affirm makes upgrading your home easier. It is accepted at Wayfair, West Elm, Lowe’s, and Casper.

3. Fashion and Apparel.

A wide range of fashion brands currently support Affirm, allowing you to finance all but the most exclusive clothing. You can enjoy shopping at Adidas, Nordstrom, Neiman, Marcus, Revolve, Zara, Urban Outfitters, Mango, and more.

4. Travel and Experiences.

You can split the price of your trip, accommodation, airline, or gig tickets. The service partners in this category are Kayak, Expedia, Priceline, Delta Vacations, Vivid Seats, TickPick, Vrbo, and many others.

5. Fitness and Wellness.

Health-minded people can use Affirm to invest in personal fitness products or memberships at Tonal, Therabody, Peloton, and BowFlex.

6. Beauty and Personal Care.

Affirm customers can afford high-quality skincare, cosmetics, and other self-care products thanks to the Pay in 4 feature. They can shop at Sephora, Dermstore, Philosophy, Pureology, and Ultra.

7. Outdoor Goods.

Outdoor enthusiasts can finance equipment and gear for their adventures at REI, Rad Power Bikes, Outdoor Vitals, and other similar stores.

8. Luxury Goods.

The service makes upscale purchases more affordable, allowing consumers to split payments for premium items at Gucci, Pandora, Prada, Tiffany & Co, and Louis Vuitton. 

9. Automotive and Accessories.

For car-related needs, Affirm partners with dealerships that provide repairs and accessories. These include Carvana, Tire Rack, Tire Agent, Real Truck, Parts Geek, AutoZone, and even Harley-Davidson.

How to Use Affirm Online

• Shop with a Partner Store: Visit a store that accepts Affirm’s Buy Now, Pay Later feature as a payment method. Browse and add items to your cart as usual.
• Choose Affirm at Checkout: Once you’re ready to make the purchase, select Affirm as your payment option at checkout.
• Apply for Financing: The app will ask you to create an account or log in.
• Select a Payment Plan: Affirm will offer you several payment options, such as paying in monthly installments and “Pay in 4”. Choose the plan that works best for your budget.
• Confirm Your Loan: Review the terms, including any interest rates or fees, and confirm your loan to complete the purchase.

How to Use Affirm In-Store

To make offline purchases with Affirm, you’ll need a virtual card. Once your loan is approved, you can transfer the funds to a digital Visa card that acts similarly to a regular credit or debit card. You can attach this card to your digital wallet or access it through the Affirm app.

How Affirm Returns Work

If you want to return an item purchased via Affirm, you need to contact both the merchant and the BNPL service. First, contact the merchant directly to initiate the refund, as you’ll need to follow their specific return policies.

Your Affirm loan will be adjusted after the merchant processes the return. If the merchant approves the transaction, Affirm may cancel your loan.

Note that this feature will not apply if the retailer offers a partial reimbursement or a store credit instead of a cash refund. In such cases, you are responsible for repaying any remaining balance on your Affirm loan, even if the item has been returned.

If you have problems with the merchant and cannot resolve the return, you can file a dispute. Affirm will refund your purchase if the dispute is settled in your favor, including interest. If the merchant wins, you’ll be obliged to repay the loan in full.

Conclusion

The Affirm method of operation relies on merchants investing in the service to increase their sales, meaning the app can be far less stringent than traditional banks in who can get access to loans. However, the app still performs hard credit inquiries for larger purchases, and your credit score might temporarily drop as a result. That’s why you need to assess risks and review all the available options before applying for a loan, even if it is interest-free.