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Klarna and Afterpay harken back to the good old days of layaway when you could walk into your favorite local retailer and purchase items that might have been outside your budget.

Read: How To Get Cash Back on Your Everyday Purchases

Both platforms enable you to purchase an item with a small deposit and pay the rest in installments. But what do these modern renditions actually entail? What are their advantages and drawbacks? Most importantly, which one makes more sense for you?

This article will provide a breakdown of these two popular platforms and help you make a decision that suits both your wallet and lifestyle.

How Are Klarna and Afterpay Similar?

Klarna and Afterpay are two of the top companies in the e-commerce space right now that offer Buy Now, Pay Later options. As a result, many well-known brands accept both. In fact, Klarna is a global payments and shopping company which offers a variety of products, with BNPL being one of the features.

Both of the BNPL options from Klarna and Afterpay share some similarities. These include:

• Charge 25% of the total amount at purchase.
• Offer the repayment option of 25% every 2 weeks.
• Conduct soft credit checks, which do not affect your credit score.
• Charge 0% interest as long as payments are made on time.

Klarna vs. Afterpay: How Are They Different?

While the basic business models are similar, there are key differences to consider when weighing your options.

Klarna Advantages

Here are Klarna’s variety of payment options available to U.S. customers:

• Pay in 4: Your purchase can be made in 4 installments, completely interest-free; one payment is made every two weeks.
• Pay Now: Select Klarna at checkout and choose how you would like to pay–all at once or pay over time.
• Pay in 30 days: You can select this to pay the full amount 30 days after you’ve purchased your item.
• Financing: Traditional financing is available as well, with term lengths ranging from 6 to 48 months.

Here are some of the advantages that Klarna provides:

• Late fees will be charged if you do not pay on the expected due date. There will be up to a $7 late fee charged if any scheduled payments go unpaid after 10 days have passed.
  • Any missed payments are added to your next scheduled payment. You won’t be able to use Klarna until your balance has been paid.
  • If you miss any payments, Klarna will restrict your use of payment options moving forward to prevent you from further accumulating debt.
• A wider range of retailers and more countries accept Klarna than Afterpay. Over , merchants worldwide accept payment through Klarna.
• The Klarna app offers customized recommendations, price comparison, a loyalty program, and a one-time card product that can be used for vendors that do not normally accept Klarna payments.
• Klarna makes it easy to extend payment dates when required.

Afterpay Advantages

Afterpay also offers many attractive features. To note, Klarna shares many of the same features as well.

• There is no minimum purchase amount required to use Afterpay. Klarna’s minimum will vary by merchant. While some merchants may have their own limits, Afterpay doesn’t impose any restrictions.
• Both Afterpay and Klarna conduct soft credit checks, and thus, will not report you to credit bureaus. This means that there is no impact your credit score if you are unable to fully pay for your purchase. Both apps will restrict you from using the app until you’ve completed due payments.
• The Afterpay app enables you to make purchases from over 98, vendors.
• Afterpay, like Klarna, will send payment reminders to help you stay on top of your payments and avoid late fees.

Klarna Drawbacks

While Klarna has plenty of benefits, there are some potential drawbacks to be aware of as well.

• While a soft credit check won’t hurt your score, it may prevent Klarna from approving you to make purchases through the Klarna app if you have no credit or poor credit.
• Klarna does not report negative or positive payments information to the credit bureaus–even if there is a default–thereby leaving no impact to your credit score.
• Klarna’s financing option is a traditional product, which you can use for larger purchases in term lengths between 6 to 48 months. Depending on which retailer you’re shopping with, some purchases may or may not be charged interest. In a case where there is interest applicable, the highest possible interest rate would be %.

Afterpay Drawbacks

As with Klarna, Afterpay comes with some drawbacks. 

• Afterpay charges higher late fees than Klarna. For purchases under $40, late fees may incur a maximum of 25% of the original value. For purchases over $40, Afterpay applies an initial $10 fee, which continues to accrue until the fee reaches either 25% of the original value or the maximum late fee cap of $
• Outside its basic four-installment model, Afterpay only offers two payment plans. Customers can choose to pay monthly over six or 12 months.
• Afterpay imposes a credit limit on all users, which starts at $ and may increase over time if you demonstrate good borrowing habits.
• Afterpay has less merchant availability than Klarna.

Final Thoughts

There are pros and cons to both platforms, and it’s up to you to decide which one works for you based on your individual needs.

If you’re not concerned with building credit and aren’t worried about defaulting on payments, Klarna is a fantastic option. It offers multiple payment options, comprehensive add-ons, and a wider range of use than Afterpay.

However, if you don’t have much of a credit history and want a simpler experience, Afterpay offers straightforward installment plans with zero interest that can help you make important purchases.

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