Afterpay is a financing option for clothing retailers and customers. With its buy-now and pay-later option, it gives shoppers some flexibility.
This should, in theory, make clothing more affordable.
We’ll explore this in our Afterpay review. Is it too good to be true? Or is it another way to get into debt?
Let’s take another look!
Afterpay, as we have just mentioned, is a lending app for clothing retailers. In 2015, the app was founded in Australia. The app aims to make shopping for products fun and simple.
What is Afterpay?
The essence of Afterpay consists in the ability to settle purchases over four installments. Afterpay customers simply need to download the app and create an account. Online and offline retailers can simultaneously integrate with Afterpay to offer this payment option to their customers.
You can break down purchases as small as $35 into four installments. These payments are free of interest. A 25% deposit is required. You can then take the items home immediately, just like you would with regular purchases.
Afterpay is a great idea to give consumers more control in a world where flexibility in payment is a benefit. Many of us would prefer to pay for items through a more manageable payment plan than lose large amounts of money all at once. Afterpay allows shoppers to shop at retailers that may otherwise be too costly.
Afterpay acts as an intermediary for customers and retailers. Afterpay lends money and then the customer repays it. This concept is similar to the old-fashioned Layaway system in stores where customers had a product set aside and paid in increments until they were square. Afterpay is the only way to get your product instantly.
Afterpay’s four-part process
The Afterpay process consists of four steps:
- Check out
- Complete your purchase
- You can pay for your purchase in four installments
Let’s take a closer look at it…
Afterpay in the United States is supported by more than 3,300 retailers from fashion, beauty and accessories as well as homeware niches. Explore your favourite brands such as ASOS, MAC and Karen Millen, Anthropologie and Bare Minerals.
A 25% deposit is required for new customers. This requirement is removed after a brief “settling in” period. Afterpay has one condition. Your purchase must not exceed $35. A $400-500 spending limit is available for new users. This includes orders from multiple retailers. After that, your Afterpay credit limit will be $2,000 at any given time. This applies to all users.
2. Afterpay – Checkout
If your basket is full and you’re ready to checkout, open your Afterpay account.
Registering for an account is completely free. There are no credit checks so you don’t have to go through your credit history. This is why approval is instant and quick.
Afterpay services are only available to those who have reached 18 years of age.
3. Complete your Purchase
After you create your Afterpay account, you can easily complete future checkouts.
4. Pay in Four Instalments
Afterpay’s payment plan does not charge interest (except late fees). However, they have handy reminders that will remind you to make timely repayments.
Each installment is due two weeks after the date of purchase and each equals 25% of the total purchase price.
The pros and cons of using Afterpay
Let’s begin with the perks…
Afterpay seamlessly integrates with online stores
Afterpay will take care of all the rest. It is possible to save this payment method as your preferred so that future orders can be processed in a single click.
Afterpay will verify your information, approve the transaction and provide you with a customized payment plan. Shopping has never been so easy!
Afterpay does not run credit checks on customers. The only information you will need to provide Afterpay when creating an account are the following:
- Create a new password and username.
- Your best contact number
- Verification code (which they’ll text to you at the above number immediately).
- Your name
- Date of birth. (You must be 18 or older)
- Your bank details
All payments are interest-free
Afterpay is proud to offer a completely free service. The app lets you pay for clothing, cosmetics and furniture in four weekly installments. This allows you to spread out the cost of your extravagant purchases over a period of time. The best part is that you won’t pay a cent more if you have paid upfront for the items.
This exception is only if you are late in repaying your loan. An $8 late fee is charged. This is still a very affordable option, compared to traditional credit cards. Some lenders charge interest rates up to 20% for every transaction. Affirm and other services that allow incremental payments are also available. They can charge up to 10% to 30% APR depending on your credit score over the past 36 months.
Afterpay will remind you of your payments when they are due. Afterpay sends out alerts before the due date and money automatically withdraws from your bank account. You don’t have to authorize the transaction again.
Afterpay is committed responsible spending. Afterpay will not allow you to use Afterpay again if you are late with a payment. What’s the result? It’s not possible to go on a debt-building spree.
Let’s now look at the downsides to Afterpay…
Afterpay encourages impulse purchases
Afterpay doesn’t directly cause poor financial management among its users, but it does encourage a certain level of fiscal irresponsibility. This service does not directly sell clothes, shoes, makeup, or home goods, unlike the stores it promotes. It promotes a certain type of mentality: buy now, pay later. Impulse buying may seem appealing at first, but it could end up leaving you with a lot of stuff you don’t actually need or want.
Late payment fees apply
Afterpay does not charge interest. Users have to make their profit elsewhere. Late payment fees are the place where they make the most of their money.
Afterpay allows you to log in and manually push the transaction through if your card is declined on the due date. After those 24 hours, however, an $8 late fee is added to your account. A further $8 will be added to your total owing if you don’t pay within seven days of the due date.
Let’s suppose you miss four payments on a $300 purchase. You would be responsible for $64 in late fees. This is more than 20% of the original spending. Imagine that you didn’t have enough money for next month and that you bought more than one of these purchases. You will find yourself in a difficult financial position if you suddenly incur several late fees.
This is not a rare occurrence. This is not a mistake! In the first half 2018, Afterpay generated a fifth its revenue solely from late fees. It’s not surprising, given how easy Afterpay makes spending.
Paying is the only way to pick
This is a major advantage of Afterpay for some users. This company handles everything so that you can spend more time tracking deliveries and internet banking. What do you mean by it not being dispatched yet?) It was only thirty seconds since I placed it! ).
For the money-conscious shoppers who read this Afterpay review you may prefer to set up your own payment schedule and set a direct debit on a date (like payday). Standard credit cards offer the advantage of being able to set up your own transfers so you know there will be money when it comes time for payout.
Afterpay makes it easy for you to avoid late fees by controlling the entire process. (See above!) Overdraft fees from your bank or building society. Although they may not charge interest, if you spend more than you should on your card or Afterpay’s repayment schedule doesn’t match your personal payment schedule, then you might be subject to additional charges from your bank or building society.
Minimal Credit Checks
Afterpay does not require you to pass a credit check before you sign up. This allows people with bad credit to continue with the same spending habits that may have gotten them in debt.
Afterpay is not recommended for people who have had a history of spending excessively on buy-now-pay later services. There’s very little support to help you shop responsible.
Afterpay can affect your ability to apply for loans
Do not be fooled by the fact that a. Afterpay does not run credit checks on any applicant for its service. Technically, Afterpay won’t affect your credit score.
Lenders who offer home loans or mortgages still consider buy-now-pay later schemes (like Afterpay), as a line credit. You’re borrowing money that you don’t actually have; lenders will look at the Afterpay account status when deciding whether or not to lend you money.
Unfortunately, Afterpay has had to turn down assistance due to poor credit. Be careful and only buy what you can afford to repay. Otherwise, your credit score could be affected.
Limits on spending
This one is a bit of an iron fist. Afterpay’s spending caps prevent Afterpay users from spending a lot despite their inability to repay. These spending caps prevent customers from borrowing too much and causing financial trouble.
These restrictions can be too restrictive if you are a long-term Afterpay user and are good at paying back the money in due time.
Afterpay’s automated system sets individual spending limits. Based on your repayment history, this determines how much you can borrow and what you can spend. Responsible users should be able to spend large amounts (up to $2,000) without being blocked. Trustpilot reviews have shown that this is not always true, which has caused some frustration among disgruntled customers.
We’ll be discussing reviews in the next section.
Customer reviews for Afterpay
Trustpilot has given Afterpay a rating of 4.9 stars. A staggering 97% percent of reviews rate the service “Excellent” and “Great”.
It’s loved for its ease of use, while users also love its affordability and flexible repayment terms.
Here’s an example of what Afterpay users think:
“Great way to purchase designer clothes and unique homeware at affordable prices and flexible payment schedules!” !”
“Great way to budget without interest!” !”
Afterpay is my favorite service. There are no interest fees and they send reminders to remind you of your payments. It’s also bi-weekly rather than weekly.
One user went so far as to state that “Afterpay” is the greatest invention of all time. Thomas Edison, take your pick!
However, Afterpay has not been for everyone. Some of the most negative comments include…
One user called the company “deceptive” and claimed that they were “hit with multiple fees on many occasions.” They also warned other people who might be interested in Afterpay that it was “very misleading service.” It’s better to buy things right away!
Some went so far as to say that they would give zero stars or minus stars.
Trustpilot reviewer: “If I could give less that [one star], then I would,” he wrote. “Unethical, no customer service.”
Afterpay customers feel that Afterpay customer service is lacking in some ways. There are also reports of rudeness and customer support representatives not being able to offer enough help.
Another user wrote, “Horrible customer support.” It takes days for a reply. Claim that they didn’t receive a payment from them, even though it clearly shows it was paid by Afterpay and came out my account. […] I have spoken with customer service representatives and they were helpful but don’t know what to do or how to help me. […] This was a wonderful idea.
What about Afterpay’s infamous customer service? What kind of customer support is available…
Afterpay Customer Service
Because money is involved, there will be times when you need to contact the Afterpay team immediately. How does their customer service perform?
Afterpay’s customer support is poor, especially considering the delicate nature of their business. You can submit a support ticket on their website. Here you can select from a variety of topics and explain why you are contacting them. You will then have to wait for an email from them.
In the FAQ section of the company, you will find a number to contact customer service. You can reach them Monday through Friday from 7 AM to 7 PM CST and Saturdays from 9 AM to 5 PM. They recommend that you use their ticketing service even though they are in this section.
Afterpay for Merchants
You might be curious about Afterpay’s merchant side. Afterpay takes out the risk of fraud or poor credit and pays merchants directly for products they purchase through Afterpay. This allows merchants to ship their products as usual, without any risk. Before the payout is paid, a merchant fee of 4% is deducted.
We’ll end this Afterpay review with answers to some frequently asked questions about the Australian buy-now, pay-later scheme.
What makes Afterpay money?
Afterpay may sound too good to be true. You might be prudent to ask how the company makes its revenue.
Afterpay clearly answers this question by saying that they charge retailers and not customers. There are no fees for you, the shopper, as long as you pay your two-weekly installments on time. Afterpay does charge late fees, but they are a part of Afterpay’s revenue. Don’t be caught!
What should I do if my bank is unable to pay?
Afterpay will charge you a late fee in most cases. If you make multiple purchases, this could quickly add up to a significant amount. Afterpay has a financial hardship policy, but some users have described it as unclear.
Afterpay’s website states you may be able to defer your payments, pay less or remove late fees in certain circumstances. Afterpay might have hardship policies that apply to you if you are suffering from a natural disaster or unemployment, domestic violence, a medical condition, or any other circumstances. Afterpay encourages people to contact them if any of these situations apply to them.
Can I change my payment date?
Afterpay recently made it possible for you to change the date payments are taken from your bank. This can be done via their website or mobile app. Simply open the order and select a new date. The payment dates will default to two weeks after your first payment.
These restrictions make it less transparent than when you transfer funds with credit cards. It’s a good step in the right direction.
What happens if my order exceeds the limit?
The first payment may be more costly if you are looking to buy something that is beyond your budget. Afterpay will inform you of your payment plan before placing your order. There shouldn’t be any surprises.
However, you may only be able to make a higher initial payment under certain circumstances. Afterpay does not specify what factors are considered for this arrangement.
What happens if Afterpay is used to pay?
The retailer is responsible for the quality and safety of the goods. If you are unhappy with the delivery or if products arrive damaged, please contact the merchant. For more information, make sure you review the refund and return policies of each retailer you have purchased from.
What happens if you cancel an order prior to completing your Afterpay payments plan?
Your payments will be adjusted starting at the fourth payment. All future payments will be canceled if you are entitled to a full refund. Any paid increments will also be returned to your account.
Partial refunds can be more complicated. If you receive a $80 refund on a $100 product that costs $100, your $25 payments will be adjusted to $20. Your future payments will be cancelled if your first payment was less than $20. Does that make sense?
Our Last Thoughts
It seems like both critics and champions can agree on one point: Afterpay has an amazing idea. It works great when it works. But if something goes wrong, you could be in serious trouble.
Budgeting and payment plans are dependent on your ability to budget responsibly. Afterpay should be used only if you know when your money will arrive and go. Be aware of the possibility of unexpected expenses, and take precautions. Before you commit your hard-earned money, we recommend reading through the fine print.
Afterpay customer reviews have shown us that their customer service is not great. We advise you to proceed with caution. Afterpay is a great option if you are looking to purchase designer clothes, accessories and furniture. However, it may be worth ordering smaller orders until you feel satisfied with the service Afterpay provides. We’d recommend it to anyone who has nothing to negative to say about the service.