“Will that be cash, credit card or personal loan?”
The next time you shop online, you may be offered a new way to pay – a personal loan with fixed monthly payments. Instead of using cash or plastic at checkout, you would provide some personal information and get a loan in minutes.
CONVENIENCE AT A PRICE
Targeting millennial shoppers in particular, these lenders tout fast loan applications, no hidden fees and credit approval for those who don’t usually qualify.
But access to credit comes at a price. While some retailers may offer zero-interest promotional rates, annual percentage rates from Affirm and Bread, for example, can be as high as 30 percent.
Not all shoppers get approved.
WHAT CONSUMERS SHOULD KNOW
Convenience aside, consumers need to know what they’re getting into, says Carole Reynolds, senior attorney at the Federal Trade Commission.
• What kind of financial product is it and what are the terms? Many companies offer installment loans, which have fixed rates and payoff periods. Others offer leases, lines of credit or zero-percent financing for a limited time period.
• How does the loan impact your credit? Every time you apply for a loan, your credit information gets pulled and the loan will appear on your credit report.
This article was provided to The Associated Press by the personal finance website NerdWallet. Amrita Jayakumar is a writer at NerdWallet. Email: email@example.com.