Inside Klarna
Sep 4, 20207 min read

Your Klarna and Pay in 4 questions, answered.

Klarna K logo

by Klarna

Klarna is a shopping service that helps you discover new products and get what you love, with the flexibility to split your payments into manageable, interest-free installments.* You can use Klarna’s flexible payment options at checkout at your favorite stores or through our app. Using our app makes shopping easier—you can create a wish list to save all your favorite items in one place (without opening a thousand tabs), find the best deals, and when you shop with the Klarna app, pay later nearly everywhere.

We understand that using this type of flexible, installment payment option is new for a lot of people, so we work to make it clear and easy for you every step of the way. Here we’re answering some of your most asked questions about Klarna and our Pay in 4 installment options:

So what are installment payments/buy now, pay later? How does it work?

Paying in installments is our way of helping you get what you need or want right away while giving you more flexibility over how you pay. It basically means that we assume the cost of your purchase at checkout, and then you pay Klarna back over time. Installments allow you to pay for purchases on a manageable schedule for your budget.

Klarna has a few different payment options, right?

Exactly. This article is focused on our most popular option, Pay in 4, but we’ll quickly outline the different ways to shop with Klarna.

  • Pay in 4: Interest-free installments spread out over 4 payments at checkouts with our retail partners and through our app.
  • Pay Now: Available in our app, is basically like using cash—it’s an immediate purchase—but with the perks of the Klarna app experience.
  • Pay in 30: This option, available at select retailers, lets you try before you buy.
  • Financing: Financing with Klarna is a credit option available at select retailers.

Does Klarna check my credit? Will shopping with Klarna impact my credit score?

In order to make sure you’re able to Pay in 4 interest-free installments, we run a soft credit check. A soft credit check doesn’t affect your score, it just helps us confirm that you pay your bills on time.

Note: if you use our Financing option (currently available with select retailers), we’ll run a hard credit check.

Am I eligible to use Klarna’s installment payments?

You’ll know as soon as you head to checkout whether you’re eligible to Pay in 4 interest-free installments. If it shows up as an option, you’re good to go.

If you aren’t eligible to Pay in 4, or you’re comfortable paying outright, you can use our Pay Now option and enjoy the benefits of the Klarna app—like seamless tracking, returns, and in-app content.

How much can I spend using Klarna?

Everyone has a different total spending limit based on their unique finance history. We want to empower you to make purchase and payment decisions that make sense for your specific financial situation, so we only lend what’s appropriate for you at this moment in time. As you continue using Klarna, we’ll make an assessment and potentially increase your spending limit, but we don’t accept customer-initiated requests for more credit.

What happens if I miss a payment?

Before we get into that, here’s what we do so that you don’t miss a payment. At checkout, your payment schedule is clearly laid out so that you know what’s ahead. After checkout, we’ll send you emails and in-app reminders to help make sure you don’t miss a payment. If you’d like, you can even set up autopayments.

If you Pay in 4 and we are unable to collect a payment on the scheduled date, we’ll send you an email letting you know there was an error, and try again. If the payment is unsuccessful again when we retry, there is a late fee up to $7.00. Your missed payment will be added to the next scheduled one, and you won’t be able to purchase again until your balance is paid.

It’s important to us to ensure safe spending practices, so when you miss payments, it tells us to pump the brakes and limit your use of our installment programs going forward. If you’re concerned about making payments on time, let us know. Our customer service team is available to help you to find a solution.

Can I pay early?

Sure thing. You can choose to pay off the balance or make one of the installments earlier. In the app, click on My Klarna–> Payments–> select the order and click Payment options.

What’s the catch? How does Klarna earn money?

Real talk—retailers. We don’t charge unfair interest rates or make major profits off of late payments. We earn the majority of our money through strong partnerships with retailers all over the world. Our products make theirs easier to sell, so integrated merchants pay us a commission of their sales that use Klarna. Win, win.

How is Klarna’s installment payment option different from credit cards?

Great question. The biggest difference? Klarna doesn’t charge interest on our Pay In 4 option, and there are no hidden fees.

Unlike a credit card limit that increases as you spend—and can encourage more spending—we cap the amount you can spend using the app (aka the amount you have to pay off) based on your financial situation at the time of purchase.

Credit card companies bank on you taking a while to pay them back. The longer it takes, the more interest you pay, and the more money they make. When you pay with Klarna, we establish a manageable timeline for you to pay us back, with no interest and no hidden fees.

How can I make sure I’m using Klarna responsibly?

The first step is to be honest about your own financial situation. Take care of the essentials—rent, groceries, utilities—and take a look at your statements to get a clear picture of where you stand. In your budget, map out what you’d like to do with your discretionary income and decide how much you’d like to save, use to pay down debt, or get other things you need or want. Regardless of the payment options you use, or what you buy, it’s important that they fit into your budget.

Once you’ve got things sorted on your end, we’ll help you find the payment option that’s right for you. Our goal is to deliver a better shopping experience, giving you more flexibility, better deals, and more value—and to do so responsibly.

Good to know

Want to know more about our other payment options? We’ve got you covered – you can learn more about Pay in 30 and financing here.