Q&A with Affirm: Fair and Honest Financing in an Era of Credit Fear and Uncertainty

We recently announced an all-new, flexible way to pay for your aquarium supplies through our partnership with financial services technology company, Affirm.

While the response has been mostly positive, there have been some concerns raised by members of popular aquarium message boards like Reef2Reef and Nano-Reef. We take feedback very seriously here, especially the opinions of aquarium hobbyists, so we carefully read and took note of every issue raised so that we could address each of them.

We summarized all the responses we saw and sent them to Affirm along with a request for an interview. They immediately agreed, although it’s taken a little time to get answers to all our questions. Financing is a strictly regulated industry, so everything had to be run through a compliance team before we were allowed to publish this interview.

Question (MD): What kind of fees does Affirm charge?

Answer (Affirm): The APR is a measure of the cost of credit, expressed as a nominal yearly rate. It relates the amount and timing of value received by the consumer to the amount and timing of payments made. APRs range from 10-30%, depending on a customer’s creditworthiness. Customers will see all the details of their loan upfront including the APR and the actual cost of the loan. They will never pay a penny more than the total cost they’re shown upfront.

Q: How does Affirm’s annual percentage rate compare to other payment methods, such as credit cards?

A: Average APR can differ amongst credit mix of customers at the point of sale and promotions being run at the POS, but average APR is about 21% across all categories. It is important to note that an Affirm loan is not a revolving credit instrument, as it is calculated using simple interest (vs compounding)—therefore, comparing a revolving credit card APR to a simple interest installment loan is apples to oranges. A consumer would pay 1.6% (at 10% APR for 3 month loan) to 17% of the purchase price (at 30% APR for 12 month loan).

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Q: What is the relationship between Affirm, the customer, and Marine Depot?

A: Marine Depot does not make money beyond the purchase price of the items sold.

Q: Does Marine Depot get any interest payments from the borrower?

A: No.

Q: Why was I prompted to link my checking account?

A: Affirm sometimes needs more information about your financial situation to evaluate your loan application. We may ask you to link your online checking account, which helps us determine your ability to repay a loan. If you are prompted to link your checking account and would like to continue with the application process, you may link your account by providing the login information for your online bank account. Linking your checking account DOES NOT authorize Affirm to debit your account. It only allows us to determine your ability to pay.

Q: Does Affirm offer fraud protection on purchases?

A: Affirm’s dispute resolution policy is designed to protect both retailers and their customers from fraudulent transactions. Please see https://www.affirm.com/faqs for more details.

Q: Is the cost of the item being purchased through Affirm different from the advertised price on MarineDepot.com?

A: No. Affirm charges no additional fees beyond the 10-30% APR. The prices on the products you purchase are no different.

Q: What happens if the borrower does not pay on time?

A: Affirm never charges any late fees or penalty fees. Consumers only pay what they see, never a penny more.

Q: Does Affirm report to credit bureaus?

A: Our goal is to give you the opportunity to build your credit history as you repay your Affirm loans. That’s why, for loans requested on or after August 3, 2016, Affirm reports information about your loan and payment activity to Experian (and plans to report to other credit bureaus in the future).

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Because FICO and credit bureaus calculate your credit scores in ways that are not publicly known, we can’t predict exactly how your credit score will be affected. There are many factors that could impact your credit, such as your payment history, the amount of available credit that you have used, the length of your credit history, and the number of accounts you have recently opened.

Q: Is there a code of conduct, fair lending practices, or fair debt collection process that Affirm is bound by?

A: Affirm complies with all applicable state and federal lending laws.

Q: What makes Affirm different from rent-to-own businesses?

A: With rent-to-own, the customer does not own the item until making all payments—which can take years. Conversely, a purchase made with Affirm belongs to the purchaser immediately.

Q: Why use Affirm over a credit card offering a 0% grace period?

A: It depends on your financial circumstances. Affirm, however, provides a level of certainty related to the cost of your purchase as what you see upfront is the only amount you will ever pay.

Check out the Marine Depot Financing page to learn more about paying for your order over time in 3, 6, or 12, 18, or 24 monthly installments.

You can also check out Affirm’s own detailed FAQ page, contact us, or leave us a comment below if you have any questions.