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Everything You Need to Know about PayPal Pay In 4 | Personal Loans and Advice

Key Takeaways:

  • PayPal Pay in 4 is PayPal’s buy now, pay later service that lets you spread out the cost of a purchase over six weeks when you shop online.
  • PayPal Pay in 4 doesn’t charge interest or fees, and qualifying only requires a soft credit check that won’t harm your credit.
  • While PayPal Pay in 4 is a convenient financing option, be careful not to overspend and rack up unaffordable payments. 

If you’ve shopped online at Apple, Best Buy or another major retailer, you may have seen the option to select PayPal Pay in 4 at checkout. Pay in 4 is PayPal’s buy now, pay later service that lets you spread out the cost of an online purchase over about six weeks. This financing option, also called a point-of-sale installment loan, doesn’t charge interest or fees, making it an affordable way to cover expenses – as long as you don’t spend beyond your budget.

How Does PayPal Pay In 4 Work?

PayPal Pay in 4 lets you buy an item by paying 25% of the total cost upfront. Then, you’ll pay another 25% on a biweekly basis until you’ve paid off the item in full.

Let’s say you’re purchasing an item that costs $600. If you choose PayPal Pay in 4 at checkout, you’ll pay $150 at checkout, followed by three additional payments of $150 every 15 days. Altogether, you’d pay off the full $600 in about six weeks.

PayPal Pay in 4 is only available for certain items at select retailers, such as Apple, Target and The Home Depot, among others. To use it, you have to be at least 18 years old and hold a PayPal account in good standing or be willing to open one. This service is offered in every state except for Missouri and Nevada.

Does PayPal Pay In 4 Have a Credit Limit?

You can use PayPal Pay in 4 to finance purchases between $30 and $1,500. If you’d like to finance a pricier purchase, PayPal also offers a monthly installment loan option called Pay Monthly.

Unlike Pay in 4, Pay Monthly charges interest rates from 9.99 to 35.99%, though it sometimes offers rates starting at 4.99%. You can finance purchases between $199 and $10,000 with PayPal Monthly and choose terms with six, 12 or 24 payments.

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Does PayPal Pay In 4 Affect Your Credit Score?

PayPal Pay in 4 generally does not affect your credit score. You’ll need to pass a credit check to qualify for this point-of-sale loan, but PayPal only runs a soft inquiry on your credit, which won’t harm your score.

You’ll get an instant approval decision during the checkout process. Unlike some other installment loans, PayPal Pay in 4 doesn’t report your remaining payments to the credit bureaus. However, that could change if you default on your loan.

“(PayPal Pay in 4) won’t have any influence on your credit if you pay the account as agreed,” explains Bruce McClary, senior vice president of membership and media relations at the National Foundation for Credit Counseling. “Should the account become past due, you may run the risk of negative impact to your credit score as debt collection activity escalates.”

Does PayPal Pay In 4 Charge Interest and Fees?

PayPal Pay in 4 does not charge interest or fees, such as sign-up, application, late or nonsufficient funds fees. However, if you overdraw your bank account to make a PayPal Pay in 4 payment, your bank might charge you overdraft fees.

How Do You Pay Your PayPal Pay In 4 Balance?

When you choose PayPal Pay in 4 at checkout, you’ll need to link a bank account, credit card or debit card. Then, PayPal will automatically withdraw your remaining three payments from your provided payment method.

If you tend to keep a balance in your PayPal account, you may wish to pay off your loan from that reserve. While PayPal can’t take automatic payments from your account balance, you can sign in to your account online or through the PayPal app to make extra payments or pay off your balance in full.

PayPal doesn’t charge any penalties for making extra payments or paying off your balance ahead of schedule. However, you’ll need to make the payment before midnight on the day before your next payment is due to prevent it from being automatically withdrawn.

If the withdrawal still goes through, any overpayment will get refunded to your PayPal account. Note that once you’ve agreed to your PayPal Pay in 4 loan, you can’t pause, postpone or skip your subsequent payments.

Is PayPal Pay In 4 Safe?

PayPal keeps your information secured and doesn’t share your financial details with anyone. PayPal Pay in 4 also comes with purchase protection coverage. If the item you buy is damaged, different from its description or doesn’t arrive, PayPal could reimburse you for the full purchase price and shipping costs.

How Do Returns Work With PayPal Pay In 4?

If you’re returning an item that you purchased with PayPal Pay in 4, you’ll need to keep making payments on your point-of-sale loan until your refund has been fully processed. PayPal will apply your refund to your PayPal in 4 loan, as well as issue any excess amount to your PayPal account balance.

Once your loan has been paid off in full, you can stop making payments on it. However, if the merchant reimburses you directly with store credit, a gift card or cash, you’ll still have to pay back your PayPal Pay in 4 loan.

Should You Use PayPal Pay In 4?

If you’re looking to pay off an item over time, PayPal Pay in 4 could be a worthwhile option and an affordable alternative to credit cards. With this BNPL approach, you’ll be able to get what you need with 25% upfront while paying the rest back over six weeks.

Plus, applying for Pay in 4 won’t impact your credit, and you won’t have to worry about interest charges or fees. By opting for Pay in 4 over a credit card, you can also avoid driving up your credit utilization and harming your credit score.

On the flip side, PayPal Pay in 4 would not be available if you’re looking to finance a purchase greater than $1,500 or get a lengthier repayment term. Plus, it may not be a good fit if you’re unsure of your ability to afford the biweekly payments.

“The convenience cannot override financial discipline,” says Danny Cieniewicz, certified financial planner at Pennsylvania-based Hyperion Financial. “Any time a buyer makes a voluntary purchase, (they) should be doing so with the intention of paying off the expense or paying upfront.”

If you’re concerned about spending past your means, it may be better to save up for a big purchase so you can pay it in full rather than relying on a buy now, pay later service like PayPal Pay in 4.

Sarah Goldberg
Sarah Goldberg

Sarah is a seasoned financial market expert with a decade of experience. She's known for her analytical skills, attention to detail, and ability to communicate complex financial concepts. She holds a Bachelor's degree in Finance, is a licensed financial advisor, and enjoys reading and traveling in her free time.

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