If you're old enough to remember the retail days of yesteryear, then you're probably familiar with "layaway." It's a payment plan that allows customers to reserve items in-store as they cover the cost of it incrementally. Today, online shoppers can utilize a similar online financial service known as Klarna.
Recently, a TikToker who goes by Sin (@yfu.uwu) posted a video that's accrued over 770,000 views. In the clip, she features a vehicle sporting Klarna branding. It's a pink-wrapped Mercedes crossover with Klarna's company logo emblazoned on its rear windshield and bumper. A person can be seen entering the vehicle's front passenger's door.
Sin seems to believe the car belongs to a Klarna employee tasked with visiting people's homes. Presumably, this is done in an attempt to collect on the money a shopper owes Klarna in back payments.
Klarna allows customers to break up payments for items in four interest-free installments. Additionally, the application allows approved customers to pay for an item within 30 days. If shoppers would like a larger window, they can finance payments for items with different timelines. Patrons who select this option can pick the timeline and interest rate that they would like.
Furthermore, Klarna writes on its website that it allows customers to extend the due date of its payments. However, due dates for financed items aren't eligible for extensions. Moreover, the application states that shoppers who are unable to pay for their items due to financial hardship can contact the app.
There's nothing on Klarna's debt collection page, however, that indicates house calls will be made to shopper's homes. Instead, the company writes that unpaid debts will go into collection. "Missed payments and unpaid debts are sent to debt collection," the website indicates.
The Daily Dot has reached out to Klarna via email to discern whether or not the brand indeed makes house calls. A representative from the bank said this is unequivocally not the case.
"This is completely false. Those are Klarna branded taxis which are part of a marketing campaign in New York," a spokesperson said.
NerdWallet gave an in-depth assessment of Klarna's services, breaking down its pros and cons. The outlet stated some consumers may appreciate the ability to break their purchases up into four interest-free payments. However, on the downside, there are fees associated with some purchase options. Furthermore, making payments via Klarna won't improve a person's credit score. Also, there are late fees to consider if you miss payments.
The website went on to delineate its various options as well. If patrons intend on using the pay-in-4 option, they have 6 weeks after their initial payment to cover an item's total cost.
This could be a good way for folks who are paid in regular bi-weekly intervals to space out their payments. Moreover, they won't have to worry about accruing interest as long as they can make their payments in a timely fashion.
If you decide to use Klarna's financing option, be aware that you could be hit up to 33.49% APR on a purchase. Which means you could be paying a massive premium for an item over time.
The blog Ramsey Solutions says that for many consumers Klarna "is a good way to be broke now and later." They added the app is "not your friend" and is a European bank. It's become mostly associated with its "buy now, pay later" solution like Afterpay and Affirm.
They stated that the app's financing option is the "most dangerous" due to high APR. However, Ramsey also notes missed payments on Klarna's pay-in-4 also comes with fees — $7 for each missed one. Let's say your account doesn't have enough money in it to cover those fees. Or you cancel your credit card and forget to update your Klarna application. That means you could be hit with a $21 surcharge for your purchase if you're not careful. And then if you don't pay it off, the remaining amount you owe Klarna will be sent to debt collectors. Not to mention your credit score will more than likely take a hit as well.
One person who responded to Sin's video quipped that they haven't made good on their Klarna payments for quite some time. "Girl I haven’t made a payment since 2022," they said.
Another person wrote, "I'd cry if a financing company came knocking on my door for a $33 payment on a laptop."
One TikTok user stated that their fear of financial institutions has influenced their payment plan decisions. "I pay mine early. They know I don’t play," one said.
@yfu.uwu Afterpay probably next ???? • • • #klarna #afterparty #fyp #nyc ♬ original sound - ✖️S I N✖️
The Daily Dot has also reached out to Sin via TikTok comment for further information.
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The post ‘Klarna out here collecting y’all payments’: Woman spots Klarna car. Are they making house visits now? appeared first on The Daily Dot.
