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PayPal Pay in 4: How it works, fees and risks

Pay for your online purchases in four installments.

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The buy now, pay later industry is getting a run for its money. PayPal has entered the fray with a feature called “Pay in 4,” which allows shoppers to finance their purchases in four smaller installments. You can use this plan on items priced between $30 and $600, with payments due over the course of six weeks. Navigate your purchases and money owed directly through your PayPal wallet.

How does this payment plan stack up against similar services like Affirm and Afterpay? We took a closer look.

Note that this service is not currently available for residents of Missouri, New Mexico, North Dakota, South Dakota, Wisconsin or any US Territories.

How to use PayPal Pay in 4

Using PayPal's buy now, pay later service is pretty straightforward:

  1. When you reach checkout, select Pay in 4 as your payment method.
  2. You'll be notified if you are approved instantly.
  3. Make your first payment to complete the checkout process. You'll make the next three payments every two weeks.

Features of PayPal Pay in 4

  • Finance items that range from $30 – $600
  • Pay off your purchase in six weeks
  • Manage your payments through the PayPal app or paypal.com
  • Use at hundreds of retailers, including Aldo, Fossil, Best Buy and Bed, Bath & Beyond
  • Enjoy interest-free payments

Pros and cons

Pros

  • No fee to sign up
  • Soft credit check won't impact your credit score
  • Speedy approval process
  • Partnered with many popular online stores

Cons

  • If you're looking to finance pricier purchases like expensive furniture, you might exceed the $600 limit
  • No straightforward breakdown of late fee costs

Will my credit score be affected with Pay in 4?

The new feature may selectively perform soft credit checks, but those won't affect your credit score, according to MarketWatch's interview with Doug Bland, vice president of global credit. He added that "Pay in 4" stands out from other buy now, pay later plans because "a lot of consumers want to avoid paying credit card interest and want to borrow money without a credit check."

It's worth noting that Splitit and Afterpay don't perform a credit check, while Klarna and Affirm do.

What are PayPal Pay in 4's interest rates?

There are no interest rates when you use Pay in 4, though you could be charged a late fee if you miss a payment. PayPal does not disclose how much those fees will cost, and it can even vary from state to state.

Is PayPal's buy now, pay later safe?

Yes. You'll enjoy the safety features of PayPal, which includes 24/7 monitoring of transactions, secure storing of your payment information and encryption to protect you while you're making purchases. If you don't receive your item or it shows up not as advertised, PayPal will refund the full purchase price and shipping costs in most cases — though terms and conditions still apply.

PayPal Pay in 4 vs. PayPal Credit

If you're making a pricier purchase, like a roundtrip plane ticket somewhere exotic or a fancy new bed, PayPal Credit is likely a better option. You'll get a reusable credit line and have six months to pay off purchases of $99 or more.

You won't pay interest if you make your payments on time with PayPal Credit. However, interest will be charged to your account if you're late. The APR for new accounts is 23.99% and late fees are up to $40.

While we can't find mention of whether late payments impact your credit score, we do know that PayPal Credit reports to Equifax, Experian and TransUnion. So it's possible that your credit score could be affected either negatively or positively based on the timeliness of your payments.

Pay in 4 vs. other buy now, pay later companies

Pay in 4

Four payments due over six weeks

No

Yes, varies from state-to- state

Affirm

Choose between 6-, 12- and 18-month payment plans

10% to 30% APR

No

Afterpay

Four payments due every two weeks

No

Yes, never exceeds 25% of your initial order value

Splitit

Choose a payment plan from 3 months to 24 months

No

No

Klarna

6-month to 36-month financing

19.99% APR or no interest if you pay in full before the due date

Up to $7

Is Pay in 4 worth it?

It depends. If you don't want to deal with interest and feel comfortable paying off your purchase over a shorter period, this could be a solid financing option. Should you need more time to make your payments (and feel fine about paying some interest!), then Klarna, Splitit or Affirm might be a better choice thanks to longer, more flexible payment plans.

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