Personal Loans

Klarna Review: Buy Now, Pay Later Shopping

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Klarna is a financing platform that allows consumers to buy now and pay later. It lets you pay via installments, delayed payments and extended financing. It’s easy to use when buying from box stores as well as luxury and boutique brands.

However, Klarna is not great for borrowers with bad credit. Approval for the installment and 30-day payment options is based on a soft credit check, and long-term financing requires a hard credit check.

This Klarna review will cover how the service works and whether it’s a fit for you.

What is Klarna?

Klarna is a financing service that allows you to shop from a variety of retailers without an upfront payment. Klarna offers three buy now, pay later options:

  • Interest-free installment plan
  • Pay in 30 days
  • Financing of 6 to 36 months

How does Klarna work?

Klarna credit terms
  • 19.99%
Minimum monthly interest 
  • $2
Annual fee 
  • None
  • Returned payment: Up to
  • Late payment: Up to $35
  • Over-the-limit charge: No fee


Under the installment plan, you pay off your purchase in four equal payments. You will be charged a quarter of the price when the item ships, and then again every two weeks until the purchase is paid off. When you sign up, you give your debit or credit card information, and your installments are paid automatically.

Klarna’s pay in 30 days option lets you purchase an item and decide whether you like it before you pay for it. Provided you pay within the 30 days, you won’t pay any fees or charges on top of the purchase amount. If you return the item before the 30 days is up, you can note that in the Klarna app to avoid being charged.

The Klarna credit plan works similarly to a traditional credit card, though you don’t pay any interest if you pay off your balance within six months. Klarna also offers a planned payment agreement in which you may receive a reduced interest rate if you commit to set monthly payment amounts. You can also use the flexible plan, in which you choose how much to pay each month (there is a minimum required payment amount).

Who qualifies for Klarna

Klarna is not ideal if you have bad credit, particularly if you want the 6 to 36 month financing plan. The company runs soft credit checks when customers request an installment or pay in 30 days plan, which means they verify basic information (like your age) but don’t report the inquiry to the major credit bureaus.

Klarna runs a hard credit check for all 6 to 36 month financing applicants. So, if you have bad credit or a limited credit history, you’re unlikely to qualify for credit financing. Additionally, a hard credit check shows up on your credit report and temporarily lowers your score.

If you have a moderate to good credit score, you might qualify for one of these plans, though approval depends on how much you are trying to spend. Klarna doesn’t list spending limits on its site, but it can deny requests based on how much you want to borrow, and being approved once doesn’t guarantee you’ll be approved in the future.

Which stores offer Klarna financing

The good news about Klarna financing is that you can use it at a broad range of retailers, such as H&M and Khloe Kardashian’s Good American, along with other recognizable stores listed below. Klarna stores include several jewelers, mattress brands, a motorized scooter company and others.

You can also use Klarna at big-box stores, though these don’t appear on the website. When you use the Klarna app, you’ll find links to Amazon, Target and Walmart, among other big-name retailers. Keep in mind, though, that Klarna may not be the best option for those stores. Some of those brands offer their own branded cards with special financing promotions and rewards, so compare offers before deciding how to pay.

How Klarna handles returns and refunds

When you return items purchased through Klarna, you submit the request through the original merchant and then report the return via the Klarna app

If you receive a partial refund and are on the installment plan, Klarna will apply the credit to your final payment amount. Consumers who chose the pay in 30 days option will receive updated invoices showing the reduced balance. Those who have a financing plan will see a lower balance but will make payments as usual until the account is paid off.

In the case of full refunds, payments are credited back to your original payment method.

What happens if you default on your Klarna loan

If your payment account has insufficient funds or you’re late on your payment, Klarna enacts a two-day “snooze period” to let you get caught up. After that, your account goes into default, and you won’t be able to use Klarna for future purchases. 

Once you’re in default, Klarna reserves the right to charge the entire remaining balance right away, even if you’re on an installment plan. And, if you default with one payment method, Klarna can try to collect what you owe via other cards or accounts you’ve used with the service previously. They can also hire a debt collector to pursue the amount owed.

Klarna app: A convenient way to shop on the go

The Klarna app seems made for millennials — think colorful, minimal aesthetics and a tutorial that plays like an Instagram story. But the ease of use makes buy now, pay later shopping accessible for users of any age. Signup takes just a few minutes and requires your name, address, email and phone number (you’ll need to verify the last two before you can use the app).

Once you’re set up, the shopping tab of the app lets you browse stores or view Daily Deals offered by merchants. You can also create new ghost (payment) cards directly from the app. The Klarna app is available through the Apple App Store and Google Play Store.

How the Klarna ghost card works

To pay with Klarna, you create a Klarna ghost card that functions the same as a standard debit or credit card (if you’re using Klarna credit for long-term financing, the purchase will be subject to a 19.99% APR). You input the amount you want to use on the card (the minimum load is $35) and Klarna generates a virtual Visa card with a card number, expiration date and CVV code.

Each ghost card has a one-time use; you create a new one each time you shop through Klarna. If you sign up for Klarna credit financing, you will not receive a physical card; all of your credit line information will be available through the app.

How Klarna compares to competitors


Unlike some buy now, pay later websites, Perpay does not run a credit check but instead relies on your pay stub to qualify you for financing. This makes it easier for bad credit borrowers to be approved than with Klarna. When you make purchases through Perpay, items don’t ship until you make your first payment. That means a delay in getting the products you want — but the upside is that you won’t have to scramble to come up with your payments during the next month.

Perpay requires you to upload a pay stub when you sign up, and your spending limit is determined by how much you earn. After making a purchase, payments are automatically withdrawn from your paycheck. Perpay users can buy from 500 brands, including big names like KitchenAid, Apple, Samsung and Goodyear.

Perpay is more accessible for borrowers with bad credit, but Klarna offers more financing options. And with Klarna’s four-payment installment plan, you pay after your item ships. Perpay shoppers have to wait until their first payment is withdrawn for their items to ship.


Like Klarna, Afterpay offers a four-week installment payment plan for a range of recognizable and boutique brands, including J. Crew, Free People and Jimmy Choo. Similar to Klarna, Afterpay installments are paid every two weeks, nor does it charge interest or fees, except in cases of late payments.

While Klarna offers more payment options, Afterpay’s late fee is $8 compared with Klarna’s $35.

The bottom line on Klarna

Klarna is a user-friendly website and app that makes it easy to purchase all kinds of items on a buy now, pay later basis. The app is intuitive, and the interest-free installments and pay in 30 days plans are helpful if you need to shop but are waiting to get paid, or you just want to keep more cash on hand. While the 19.99% APR on 36-month financing is on the high end, the six-month interest-free financing makes Klarna an attractive alternative to high-interest credit cards.


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