KLARNA: HOW IT WORKS
Klarna allows you to pay in several ways depending on your needs.
They have three credit products in the UK – two ‘Buy Now, Pay Later’ products (Pay in 3 and Pay in 30 days) and a longer term financing option for higher-ticket items. To use any of Klarna's UK products you must be a UK resident over 18.
With Klarna you can also pay immediately at checkout with your card of choice.
Buy Now, Pay Later.
Klarna offers two interest-free Buy Now, Pay Later (BNPL) options:
Pay in 3
This option allows you to spread the cost of your purchase into 3 equal interest-free and instalments. The first payment is made at point of purchase, with remaining instalments scheduled automatically every 30 days.
Pay in 30 days
With Pay in 30 days you have up to 30 days to pay for your goods after they are shipped, with no interest. This means you can return the items if they’re not what you expected or need, without any money leaving your bank account.
On the BNPL products Klarna conducts robust eligibility assessments on each and every purchase, including a soft credit check, which will not affect your credit score. This means they take a real time view of someone’s financial circumstances so they only lend to those who can comfortably pay them back.
They make sure you’re informed ahead of time before a payment is due. In the Klarna App you’ll have the chance to pay off your balance earlier or, in case you need some extra time, you can extend the due date for free and get 10 additional days to pay. You can extend the due date only once per order.
With their BNPL products you will never pay more than the price of the purchase. If you miss a payment Klarna will reach out to you to ask for repayment but there will never be a late payment charge or interest and your credit score will not be impacted. Should you struggle to pay, Klarna has a dedicated vulnerable customer team that can help you find a solution that works for you. If you miss a payment, however, they will restrict the use of our services.
If you have fallen behind on your payments and if after repeated attempts Klarna is still unable to contact you to help you manage your payment plan, they will refer you to a debt collection agency. There is still no interest passed to you. Klarna only ever uses debt collection agencies to continue to help them make contact with customers. Klarna never sells unpaid debts to debt collection agencies on these products. This means Klarna maintains total control over how the debt is managed. They do not use enforcement agencies or bailiffs and neither do their debt collection agencies.
Klarna offers a traditional regulated credit product for the purchase of higher-ticket items in payment plans of 6-36 months. Financing may be offered interest-free or interest-bearing depending on the retailer. The highest interest rate charged is 18.9%, however, a great majority (93%) of Klarna financing sales are interest-free.
When you select financing at checkout you can choose your preferred payment plan. You’ll be informed if there is an annual interest rate upfront before you complete the application. You will know instantly if you are approved and can complete the order right away. This involves a hard credit check that may impact your credit score.
Klarna will always notify you before a payment is due and you can set up automatic payments or pay any amount – up to the entire balance- earlier than the due date anytime. If you don’t make your payments on time, there are 3 stages before an account is terminated. At each stage Klarna will send you a credit act document before eventually terminating the account and passing it on to debt collectors to help them contact you. Missing payments can affect your credit score. After being turned over to a debt collection agency, your credit score may be affected. On Klarna's Financing product Klarna does sell unpaid debts to debt collection agencies, as is standard industry practice for these products.
Where can I use Klarna?
There are different ways to shop with Klarna. The easiest is through Klarna's Shopping App. Once you download the App you can Pay in 3 in any online shop – yes any shop of your choice regardless of whether they’ve partnered with Klarna or not!
You can also choose to pay with Klarna directly on the merchant’s website.