Targeting Higher Tickets, Afterpay Raises Its Credit Limits And Repayment Periods

In response to consumer demand to use buy now, pay later installment loans for higher-ticket purchases, such as home furnishings, the big BNPL player Afterpay has increased its credit limits and repayment periods. Afterpay users can now take out BNPL loans for purchases of between $400 and $4,000 and repay those loans over a six-to-12-month period.

The increases are substantial as Afterpay users are typically started with a much lower credit limit and must pay off their loans in four installments over a six-week period. The average value of a purchase financed with Afterpay is about $150, an Afterpay spokesperson says. Consumers can raise their credit limit over time by demonstrating a solid repayment history.

In addition, the higher credit limits and more flexible repayment terms also allow merchants to reach a broader swath of consumers and increase sales. Afterpay is owned by San Francisco-based Block Inc.

“As we expand into new, higher-ticket categories, such as home furnishings for example, we are finding that consumers want higher open-to-buys on their account to purchase these products and services, and merchants want to be able to offer BNPL in these categories,” the Afterpay spokesperson says.

Expansion into higher-ticket categories has been a focus of several BNPL providers in the past year, such as rival Uplift, which makes its service available to airlines, cruise lines, resorts, and other major travel providers.

Consumers can use Afterpay’s monthly payment option when purchasing on the Web sites of merchants based in the United States, including Bellacor.com, EyeBuyDirect, FWRD, and Your Mechanic, among others, with additional merchant partners coming soon. Afterpay plans to extend the offering to merchants outside the U.S. in 2023.

Consumers taking out an Afterpay loan will pay a variable interest rate ranging from 0% to 35.99%. Interest rates are determined by such criteria as a soft credit check, amount of the item being purchased, and the consumer’s repayment history. Consumers may also be required to make a down payment on their purchase. Consumers will not be charged compounding interest and there is a cap on the total interest owed. In addition, consumers will not be charged late fees and are provided detailed statements showing the amount owed and their repayment plan at the time of purchase.

“We don’t charge interest on interest owed and the interest over the course of the loan does not change,” says the Afterpay spokesperson.

More than 98% of Afterpay transactions never incur a late fee and more than 90% of Afterpay transactions are paid with a debit card, the company adds.