Klarna is one of the UK’s most popular ‘buy now, pay later’ payment services, which
give you the option to order your shopping today and pay for it at a later date.
Since there’s no greater feeling than a package of new treats arriving on your doorstep,
this video will give you the low-down on how Klarna works, plus a handy step-by-step guide
and our top tips to help you manage your money more effectively.
HOW KLARNA WORKS
Klarna has partnered with thousands of brands and retailers, like ASOS, PrettyLittleThing,
Nike and JD Sports - you might have heard of them!
When you’re ready to checkout at one of these partner stores online, all you need
to do is select Klarna as your payment method, then choose a payment plan and, congrats,
your new purchases will be on their way.
Some stores offer Klarna at the checkout in their branches, too.
The payment plans are where it gets interesting and where you should honestly consider your
personal circumstances before choosing the right option for you.
Klarna offers three payment structures:
1.
Pay in 30 days allows you to complete your order on that day without paying, with a 30-day
window from the date your order is shipped to make the full payment.
This plan does not charge interest or late fees, and won't involve a hard credit check
that lenders can see on your credit file.
2.
With Pay in 3, you can spread the cost of your purchases equally across three installments;
with the first payment taken at the time of ordering, then again after 30 and 60 days.
You won’t be charged any interest with this plan but it does require an affordability
assessment - don’t worry this isn’t a full credit check that another lender could
see on your file.
3.
Klarna’s Financing option works a bit like a credit card, allowing you to split your
payments into monthly instalments over 6-36 months.
This payment plan requires a full credit check, which can affect your credit score, and can
charge interest.
The amount of interest you’ll pay can vary, depending on your own credit record, the term
of deal you choose and the retailer you're shopping with, as they have the option to
offer different deals, like interest-free periods.
So make sure you read the specific terms before agreeing to use this service.
You have to pay at least the minimum amount each month.
However, if you want to avoid paying more interest, look for the “interest-saver”
amount on your statement and try to pay that in full each month.
For the latest rates, head to finder.com - links are in the description below.
With Pay in 3 and Klarna’s Financing option, future payments will be taken automatically
once the first instalment is made.
Klarna will send email reminders two days before your due dates, so all you need to
worry about is having enough funds in your account.
Quick note to all my retail enthusiasts out there: you do have to be at least 18 years
old to be eligible to use Klarna.
STEP-BY-STEP GUIDE
1.
Start by shopping online at one of Klarna’s partner stores.
Our full list of shops that use Klarna is tagged in the description below.
2.
At the checkout, select Klarna as your payment method and choose one of its three payment
plans.
3.
At this stage, you’ll be asked to sign up for or log in to your Klarna account and provide
your card details but, you might not have to pay anything at this point, depending on
which plan you choose.
depending on your plan, no payment will be made.
You can review your Klarna account on a desktop or via the mobile app.
4.
If you select Pay in 3 or pay in 30 days, Klarna will run a soft credit check and you’ll
know in minutes if you’re eligible to use the service.
Returning customers may also get sent a verification code via text to confirm their account.
5.
If you select its Financing option, Klarna will run a full credit check which could impact
your overall credit score.
6.
Once approved, you’ll receive confirmation of your payment plan by email.
And your purchases will be dispatched.
7.
It might be a good idea to set calendar reminders for your payment deadlines, although Klarna
will send email reminders a few days before your payments are due.
If you’re declined, it might be worth getting in touch with Klarna to find out why.
8.
When your payment deadlines arrive, Klarna will automatically collect payment from the
debit or credit card you provided at checkout.
Unless you’re on the Pay in 30 days plan, in which case you’ll need to log in to your
account and make the payment manually.
9.
In some cases you will be able to pay off your balance earlier than the deadline.
Just log into the app or check your email for “Pay early” or “Pay now” options
on a specific purchase and follow the instructions.
With Klarna there is no official credit limit or restrictions on how many plans you can
take out at once.
However, it does work on a case-by-case basis, so the length of time you’ve held an account
and any late payments will be taken into consideration.
WHAT IF I DON’T PAY MY BILLS
Regardless of your payment plan, if you don’t make your payments on time, Klarna will block
you from using its services until the debt is settled, and it may pass your details to
debt collectors, which is likely to harm your credit rating.
OUR TOP TIPS
If you’re in any way concerned that the whole “spend now, pay later” thing will
tempt you to break your budget, here are a few quick tips to help you keep it under control.
Klarna can be a great way to “try before you buy”.
For example, if you want to order something in several sizes, with Klarna you only have
to pay for the items you keep and you don’t have to chase down a refund for those you
don’t.
Similar to a credit card, Klarna can be a handy way to invest in expensive but necessary
items.
For example, if you needed to get some new equipment for a business startup.
The Klarna app is really easy to use and can be a useful tool to help better manage your
payments.
Plus, it comes with loads of extra features and you can actually do your shopping from
the app itself.
WHAT NEXT?
As with any financial decision, make sure you can afford the repayments before using
one of Klarna’s buy now pay later plans.
For our full review and to compare which “buy now, pay later” scheme is the right for
you visit finder.com - links are in the description below.
Hit the subscribe button or stay tuned for more videos just like this one.
Thanks for watching.