PayPal Buy Now, Pay Later Review: How Does It Stack Up Against Competitors?

PayPal's buy now, pay later service lets you shop online, splitting large purchases up into biweekly or monthly installments.
Key Features
  • No interest w/ Pay in 4 payments
  • Finance purchases up to 24 months
  • PayPal buyer protection included
Overall Rating 4
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The Penny Hoarder Overall Rating
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This is a review of PayPal, which has an overall rating of 4 stars.

In recent years, the rise of buy now, pay later services has made it easier to snag a purchase and pay it off in small, manageable installments. We’ve seen companies, including Affirm, Klarna and Afterpay, rise to the forefront with flexible payment options.

However, significant players, such as PayPal, aren’t keeping quiet. PayPal Pay in 4 and Pay Monthly are here to compete for your wallets, too.

In this PayPal Pay in 4/Pay Monthly review, we look at the financial technology company’s offerings to shoppers and whether they are enough to compete with more recently established buy now, pay later options.

What Are PayPal Pay in 4 and PayPal Pay Monthly?

Shoppers have used traditional credit line offerings, such as credit cards and personal loans, to finance their purchases. Buy now, pay later services aim to make it easier for customers to walk out with purchases the same day while having little to no impact on their credit score or credit report.

Available with supported online retailer partners, PayPal’s buy now, pay later services allow you to choose one of two installment payment options at checkout. Shoppers can use the company’s Pay in 4 interest-free payments or Pay Monthly financing options.

PayPal Pay in 4 will allow you to finance a purchase between $30 and $1,500 into four interest-free payments via your bank account paid biweekly. The first payment is due at checkout, with the remaining three installments due every two weeks.

Alternatively, shoppers can select PayPal’s Pay Monthly service for eligible purchases between $199 and $10,000. This option will enable buyers to pay off their purchase in monthly payments over either six, 12 or 24 months. Interest will apply with an APR between 9.99% and 29.99%.

Looking for another buy now, pay later service? Read our reviews of Klarna, Afterpay, Affirm and Sezzle.

How Do PayPal’s Pay in 4 and Pay Monthly Offerings Work?

To begin purchasing with PayPal’s buy now, pay later offerings, you’ll need to shop at a supported retailer. Some big-name retailers that offer such financing include Best Buy, Nike, Dillard’s, Target, The Home Depot, Fossil and Ace Hardware.

It is critical to note that PayPal’s buy now, pay later service isn’t available in store and can be used online only. This makes it one of the least flexible buy now, pay later services we reviewed.

Shopping With PayPal Pay in 4/Pay Monthly

To begin, visit the website of a supported retailer. Shop as you usually would, adding any desired products to your cart. When ready, head to your cart to begin the PayPal checkout process.

Select PayPal as your payment method. If you have a PayPal account, you will be prompted to log in; otherwise, you will need to create an account.

If your purchase is eligible for PayPal Pay in 4 and Pay Monthly financing, you will see Pay in 4 and Pay Monthly available as PayPal payment options. Select one of these two choices to begin the checkout process with financing.

Once you have selected your PayPal financing option, you may be prompted to enter your personal information to complete the check process. PayPal Pay in 4 will initiate only a soft credit check, leaving your credit score intact; however, PayPal Pay Monthly approval is subject to a hard credit check.

If approved, you may be asked additional questions. For example, with PayPal Pay Monthly, you will be required to choose between different installment terms (six months, 12 months or 24 months). Select which is most favorable for you.

Downloading the App and Managing Your Purchases

When your purchase has been finalized, keep on top of any installment payments required. You can log in to the PayPal website, but we recommend downloading the PayPal app so that you always have the information at hand.

You can view detailed information, including remaining payments, about any PayPal Pay in 4 or Pay Monthly loans under the Pay Later section of the PayPal app. Current purchases will appear under Active Plans, while paid-off loans will be under Plan History.

We particularly like that PayPal includes purchase protection with every buy now, pay later purchase. As a result, you won’t need to worry about being cheated out of your money or receiving a defective product when shopping — PayPal has your back.

Additionally, PayPal does not charge sign-up or late fees for using its finance offerings.

Alternatives to PayPal Pay in 4/Pay Monthly

PayPal offers a decent entry in the buy now, pay later financing space, but it isn’t perfect for everyone’s needs. Shoppers who wish to make purchases in store will need to find another option, as well as individuals shopping at unsupported retailers.

Other Buy Now, Pay Later Services

There are several other buy now, pay later services. We have reviewed quite a few, including Klarna, Affirm, Afterpay and Sezzle. Here are how some of the most popular options stack up to PayPal Pay in 4 and Pay Monthly:

Buy Now, Pay Later Services Compared

Features PayPal Affirm Klarna Afterpay

Payment schedule

Pay in 4 and Pay Monthly financing

Affirm Pay in 4 (every 2 wks) or monthly financing

Pay in 4, Pay in 30 Days & monthly financing

First of 4 payments immediately, then every 2 wks

Interest rates

0% on Pay in 4; 0%-29.99% on Pay Monthly

0% on Affirm Pay in 4; 0%-36% on monthly

0% for Pay in 4 and Pay in 30 Days; 0%-29% monthly

0% interest

Late fees

No late fees

No late fees

Up to $7 on Pay in 4

$10, followed by $7 if payment isn’t made

Credit score effect

Soft check for Pay in 4; hard for Pay Monthly

Soft credit check; may report history to Experian

Soft credit check for Pay in 4 and Pay in 30

No credit check

Where it’s accepted

Select online retailers

Everywhere online & in store w/ wireless pay

Everywhere online & select in-store retailers

Select online & in-store retailers

Additional PayPal Alternatives

If a buy now, pay later service doesn’t feel suitable for your purchasing needs, you may want to consider a more traditional option. Personal loans and low-interest credit cards are two ways to make purchases when you don’t have the complete funds at your fingertips.

We have a selection of the best personal loan lenders available for those who may wish to go down that road. If you are entirely new to personal loans, check out our step-by-step guide on obtaining a personal loan.

For those who are considering a credit card but don’t feel confident in their decision-making process, check out the free Credit Card 101 course at The Penny Hoarder Academy.

The Pros and Cons of PayPal Buy Now, Pay Later

  • No-interest loans are available for shoppers looking to repay their purchases with biweekly payments.
  • No late fees are imposed if you are behind on your payments.
  • Purchase protection is provided with every finance option.

  • There is no option at this time to reschedule your payments if needed.
  • Interest rates are subject to change based on the individual borrower’s creditworthiness, with APRs up to 29.99%.
  • Purchasing is available only at select online retailers.

Frequently Asked Questions (FAQs)

How Do I Qualify for PayPal’s Buy Now, Pay Later Service?

To qualify for PayPal’s buy now, pay later service, you will need to be at least 18 years old and have a PayPal account in good standing. If you do not have a PayPal account, you will need to open one to apply for financing. 

States that are not included in the program include Missouri, Nevada, New Mexico, North Dakota and Wisconsin and any U.S. territories.

What Credit Score Do You Need for PayPal Pay Later?

PayPal does not specify a minimum credit score for use of its buy now, pay later services; however, depending on the service you select, you may be subject to either a soft or hard credit check.

What Is PayPal Pay in 3?

PayPal’s Pay in 3 financing service is available to buyers in the U.K. If you are located in the United States, the equivalent offering is PayPal Pay in 4. 

Why PayPal offers Pay in 3 in the U.K. and Pay in 4 in the United States we cannot say, but it does allow U.S. consumers to split purchases into smaller payments over a longer period of time.

Michael Archambault is a senior writer for The Penny Hoarder specializing in technology.