Klarna offers point-of-sale financing for online purchases like clothing, furniture and electronics. You may see the payment option at online merchants like Overstock.com, Lenovo, TaylorMade, Rancourt & Co., and others that have signed up to offer Klarna.
Klarna rates and terms
Minimum loan amount $35 for "pay later" and "slice it in 4" options
$300 for "slice it" option
Maximum loan amount Depends on purchase price, creditworthiness
APR 19.99% on standard purchases with "slice it" option; no interest, reduced interest and deferred interest promotions may also be offered
No interest if paid in full for "pay later" and "slice it in 4" options
Fees Origination fee: None
Late fee: Up to $35
Returned payment fee: $35
Time to funding Immediate
Repayments 30 days for "pay later" option
6 weeks for "slice it in 4" option
Six to 36 months for "slice it" pay-over-time option
Soft credit check? In some instances
How to qualify Best for Borrowers with limited access to credit and don’t have savings to cover a necessary online purchase
How to apply Applications are submitted at checkout through participating merchants
Founded in Sweden in 2005, Klarna expanded to the United States in 2015, and its point-of-sale financing is now available at 100,000 online merchants across 14 countries, according to the company.
For eligible purchases, Klarna offers the following payment options, typically presented during the checkout process:
- Pay later: With this “try before you buy” option, you shop online, receive your purchase and try it for 30 days. If you return the item, or keep it and pay the full balance within the trial period, you won’t pay interest.
- Pay over time: This option, which Klarna calls “slice it,” gives you a line of credit to buy products online and pay for them over time, similar to using a credit card. The credit limit you receive depends on the size of the purchase and your credit history. Payments are made monthly, with terms starting at six months. Promotional financing options may be available, including no interest if you pay the balance in full before an expiration date.
- Pay in installments: Klarna also offers a payment plan called “slice it in 4” that allows you to pay for a purchase in four equal installments. The first payment is charged to your credit or debit card when your purchase is shipped; subsequent payments are automatically charged every two weeks. This spreads the cost of the purchase over time, which may be helpful if you don’t have cash or available credit to buy it in full. Klarna also charges no interest. If you carry a balance on the credit card that Klarna charges, you will pay interest.
Klarna also offers a buyer protection guarantee, so you won’t be on the hook for products that do not arrive, are defective or damaged, or do not match the product description.
Is Klarna right for you?
KLARNA MAY BE A GOOD OPTION IF YOU:
Need to buy an online product immediately but don’t have money saved. Paying cash is always cheaper than financing a purchase. But if you receive a zero or deferred interest option from Klarna and can save enough to pay the balance by the due date, using Klarna is a way to receive your purchase now and pay later.
Are new to credit and do not qualify for a credit card. If you must finance your purchase, you may find Klarna easier to qualify for than a credit card. The company considers your credit score in addition to other factors, and there’s no minimum score required.
Have a credit card but don’t have a high credit limit. Taking a Klarna loan is better than maxing out a credit card, which can lower your credit score and incur penalty interest rates.
KLARNA IS NOT A GOOD IDEA IF YOU:
Receive a promotional interest rate, but can’t repay the balance on time. Klarna’s pay-over-time option may come with a reduced or deferred interest promotion, but it’s costly if you don’t pay off your balance in full before the expiration. Its pay later option should be repaid in full by the due date, which is 30 days after the purchase has been shipped.
Can use a credit card and pay it off in full. Unlike Klarna, credit cards may offer bonuses on spending, such as cash back and rewards. If you pay your balance in full each month, credit card purchases won’t cost you any interest. And credit card companies typically report payments to the credit bureaus, which helps build credit; Klarna does not report payments.
Credit cards may also offer purchase protection, which insures your products against theft or accidental damage for a limited time.
Pay only the minimum on your credit cards. If you don’t have the money to pay down your credit cards, it’s not a good idea to take out another loan, especially for a nonessential purchase.
How Klarna compares
Klarna is similar to point-of-sale financing from Affirm. It’s also comparable with personal loans for online purchases. Here’s how Klarna stacks up with other financing options.
Klarna loan Affirm loan Other personal loans
Used for Making a purchase at online merchant Loans through retailers Any purpose (debt consolidation, large purchases, medical expenses)
Loan amounts Minimum of $300 for "slice it" option
Minimum of $35 for "pay later" or "slice it in 4" options
$100 - $10,000 Between $1,000 and $50,000
APR range 0% to 19.99% (depending on promotion) 10% to 30% (0% available at some retailers) 5.00% to 36.00%
Loan duration 6 to 36 months 3, 6, 9 or 12 months 2 to 5 years
Time to funding Immediate Immediate Up to a week
Fees Late fee None Origination fee, late fee
Credit check Hard check for "slice it"
Soft check for "pay later"
No check for "slice it in 4"
Soft check Soft check, followed by hard check
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