[woodruffw]

Layaway is a different scheme: you pay down the price of a purchase in installments, and receive the item after the last payment. The layaway agreements that I'm aware of don't charge interest.

These schemes are VC-ified installment loans, which operate on the opposite model: you receive the purchase up front, and pay it down over time including interest payments.

They're arguably better on a strictly economic scale, since they give consumers the liquidity to make purchases that they'd like to make (and can actually afford, just not all at once.) They're arguably worse on a social scale, since installment loans are a form of cheap credit that people get addicted to, and are comparatively unregulated.

[stuff4ben]

I bought something off Amazon with Affirm, wasn't charged interest. I think they make money by partnering with companies like Amazon to promote more buyers and get a cut of sales from them instead of the consumer.

[woodruffw]

Out of curiosity, what were the repayment terms? I see on their website that they offer 0% APR on some of their shortest financings, so I wonder if you were bucketed into one of those.

(I would personally consider doing installments at 0%, so I'm curious as to whether you were given an advantageous plan based on a credit check or whether it was the timescale.)

[filoleg]

I think you are correct about it being timescale-based.

I only used it once out of pure curiosity, so idk all of the intricate details, but they essentially offered a 4 equal monthly payments plan with 0% interest, as long as I pay it off on time. Tested it, worked as promised, all was good.

I bet if you go outside of their deadlines for payments/try to stretch it for longer, you will get hit with massive interest rates tho, but cannot confirm that. Mostly because I only use credit for things I can easily pay off in cash at any moment (except things like car/house obv), so I basically treat it like a debit card and pay it off very pedantically on time (because with 0% interest, it is essentially just extra leverage).

[stuff4ben]

It was something like 6 payments at 0% interest so I took advantage of it. It was just offered as a payment option on the Amazon link. I'm seeing that now for condos I'm looking at renting next year too. While I can pay cash up front or just put on my credit card, I'd rather it sit and generate whatever small amount of interest and just use this to pay off my vacation over a few months with no interest.

[marcofatica]

Most of the ones I've seen had no interest, so that's new to me. Definitely changes it but I think it's a little disingenuous for the author to not at least reference layaway

[woodruffw]

For what it's worth, layaway isn't common in the US anymore. It's entirely possible they didn't know about it, or don't consider it worth mentioning because the couldn't find an example of a company actually offering it anymore.

The article was written in 2017, and mentions an APR of 19% for a $200 purchase via Affirm. Looking online it looks like their current rates are around 10-13% unless you pick the shortest term loan[1].

[1]: https://www.affirm.com/how-it-works

[wincy]

It depends on risk. I lost my job and ended up tanking my credit score after several thousand in credit cards went to collection. Affirm offered me 29.99% APR for purchases.