Buy now, pay later (BNPL) is an increasingly popular way to pay for purchases. If you shop online regularly, you may have noticed PayPal Pay in 4 appearing as a payment option on your favorite sites.
If you’re considering using PayPal Pay in 4, you should know how much you can borrow, how much it costs and when to consider using it.
What is PayPal Pay in 4?
PayPal Pay in 4 is a buy now, pay later program that allows you to split eligible PayPal purchases into four equal, interest-free payments over six weeks.
Pay in 4 is a widely available payment option. According to PayPal, you can use it with millions of online retailers, including Target, The Home Depot and Best Buy.
How PayPal Pay in 4 works
PayPal Pay in 4 works similarly to other BNPL programs. The first payment is due at the time of purchase, and the remaining three payments are due every 15 days until the balance is paid off.
For example, if you use PayPal Pay in 4 to make a $100 purchase, you owe $25 when you checkout. Then, you owe another $25 every 15 days until you’ve paid $100 in total.
PayPal makes the repayment process convenient by automatically withdrawing the amount you owe from the bank account, debit card or credit card you provided when you applied.
Loan amount
Pay in 4 is available for eligible online shopping carts between $30 and $1,500.
For larger purchases, PayPal offers its Pay Monthly program, which allows shoppers to finance amounts between $199 and $10,000. Unlike Pay in 4, Pay Monthly loans charge interest.
Eligibility
PayPal Pay in 4 is not available in all states or with all online retailers. If your shopping cart is eligible for Pay in 4, you’ll see it listed as an available payment option at checkout.
You need to apply to use the Pay in 4 service. To be eligible, you must be at least 18 years of age and have a PayPal account in good standing. PayPal may perform a credit check, though it doesn’t disclose a specific minimum credit score requirement.
Costs
There are no fees to use PayPal Pay in 4. The program has no sign-up fee, and the loans are interest-free. There are also no late fees or prepayment penalties. However, if a Pay in 4 payment brings your bank account balance below zero, your bank may charge overdraft fees.
Impact on your credit
Applying for a PayPal Pay in 4 loan will not impact your credit score. The company performs a soft credit check during the application process. Soft inquiries don’t affect your score and aren’t visible to potential lenders.
PayPal doesn’t say whether it reports Pay in 4 activity to the credit bureaus, but BNPL services typically aren’t factored into credit scores. That means a history of on-time installment payments usually doesn’t help build credit. If your goal is improving your credit, you may want to work with a credit repair company instead.
Risks of buy now, pay later services
BNPL plans are a convenient way to make purchases and pay them off over time, though they’re not without risks. As a recent Bankrate survey revealed:
- You may be tempted to overspend. BNPL is convenient because you only need to cover a portion of the cost at the time of purchase, but that convenience can make it easy to lose sight of your budget. Among BNPL shoppers, 29% say they’ve had issues with overspending.
- You may buy things you don’t need: Using BNPL plans to cover impulse purchases or other unnecessary items can be tempting. Nearly one-fifth of shoppers (17%) say they’ve regretted a BNPL purchase.
- You may have trouble tracking payments: Many people have more than one BNPL plan at the same time, and juggling multiple installment schedules can be challenging. Missing payments is an issue for 18% of BNPL shoppers.
Who Pay in 4 is best for
BNPL programs like PayPal Pay in 4 are a convenient option for shopping online, but they’re not right for everyone. It might make sense to use PayPal Pay in 4 if:
- You aren’t eligible for other lending: BNPL programs like Pay in 4 can be useful tools for people who don’t have access to a credit card or personal loan.
- You want to lower your credit utilization: Using PayPal Pay in 4 instead of your credit card uses less of your available credit at once, which is a key factor in calculating credit scores.
- You’re buying a necessary item: If you need to buy something immediately but don’t have money to cover the purchase, Pay in 4 can be a useful option for short-term, no-cost borrowing.
How to use PayPal Pay in 4
Here’s what the process of using a PayPal Pay in 4 loan looks like:
- Add items to your online shopping cart: Shop for what you need just like you normally would.
- Select PayPal Pay in 4: Choose PayPal when you checkout, and then select Pay in 4 as your payment method.
- Get a decision: The decision process is automated, so you’ll know almost instantly if you’re approved for Pay in 4.
- Finish checking out: If you’re approved, you’ll be redirected to provide a payment method and pay for the first installment payment.
- Make the remaining payments: The remaining payments come out via your confirmed payment method automatically.
Pay in 4 alternatives
PayPal’s Pay in 4 is a good option for some consumers, but it may not be the best option for you. Other financing options may be better.
Other BNPL plans
Other providers offer pay-in-four plans that are similar to PayPal’s Pay in 4, and depending on your needs, another option might be a better fit.
For example, Klarna does not set a maximum loan amount, so it might be better if you want to borrow more than Pay in 4’s $1,500 limit. If you prioritize rewards, you might prefer Afterpay since it gives shoppers access to a rewards program.
0 percent intro APR credit cards
PayPal’s Pay in 4 loans don’t have interest, but the repayment period is short. If you need more than six weeks to pay off an upcoming purchase, consider a 0 percent APR credit card. After opening the card, they offer zero interest for a limited time — typically between 12 and 21 months.
Personal loans
Personal loans are another way to borrow money with a longer repayment period. These loans allow you to borrow a lump sum you repay in monthly installments over a set period (typically one to seven years). Unlike Pay in 4, personal loans charge interest.
Personal line of credit
A personal line of credit is a flexible option for borrowing money. Like a credit card, you receive a credit limit and can withdraw funds as needed for purchases. You only pay interest based on your outstanding balance.
Lines of credit charge interest, but the rates tend to be lower than a credit card.
Cash
Since the loan term for a PayPal Pay in 4 plan is only about six weeks, paying cash can be a practical alternative. For example, you might set aside the equivalent of the installment payment every two weeks until you have enough to pay outright.
Using cash helps you stick to your budget and avoid the stress of taking on debt or paying interest.
The bottom line
With no fees and a convenient application process, PayPal’s Pay in 4 plan can be a useful way to spread the cost of online purchases over four installment payments. However, watch out for common BNPL pitfalls like overspending or buying things you don’t need.
Frequently asked questions
No, PayPal Pay in 4 isn’t accepted everywhere. It’s available to use online with participating retailers, which number in the millions according to PayPal. Unfortunately, it’s not currently available for in-store purchases, though other BNPL providers support in-store shopping.
PayPal doesn’t disclose a minimum credit score that’s needed for approval, so the Pay in 4 program may be an option for people with a poor credit history. It looks at more than just your credit to determine eligibility and considers factors like your PayPal transaction history.
Yes, it’s possible to pay off a PayPal Pay in 4 loan early. You can make extra or unscheduled repayments by logging into your PayPal account, navigating to the Pay in 4 plan, and clicking “Make a Payment.” There’s no penalty for paying off the loan early.
No, it’s not possible to change the auto repayment dates. Once you’ve entered into a PayPal Pay in 4 loan, you must make the remaining installment payments as originally agreed. Watch your budget closely to ensure funds are available on the due date. If you miss a repayment, you may not qualify for another PayPal Pay in 4 loan.
