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Consumers who use Paypal or Klarna installment financing for online purchases could face unexpectedly high costs.
Sample analysis by the comparison portal Verivox has shown that the interest rates for such financing are significantly higher than for conventional installment loans.
During a test purchase, Klarna charged 13.6 percent interest for installment financing with a two-year term. This led to total interest costs of 309 euros for a notebook worth 2,236 euros.
With Paypal, the interest rate was 10.99 percent, which led to additional costs of 251 euros for the same notebook. In comparison, the costs of a cheap installment loan are only about half as high.
Verivox Managing Director Oliver Maier warns that simple and convenient installment payments can end up being expensive.
The analysis shows that installment borrowers pay an average of 7.19 percent interest on a loan taken out in October 2023, which is significantly cheaper than financing via Klarna or Paypal.
The savings compared to Klarna financing is 46.3 percent and 34 percent compared to Paypal financing.
However, installment loans are not suitable for every consumer’s wishes, as most banks do not grant loans for amounts under 1,000 euros.
For smaller purchases, installment purchases via the payment service can therefore be a suitable solution, reports t-online.
These findings show how important it is to compare the costs of different financing options and to be aware of the potential financial burden.
– source: dagens.de/picture: Bild von Mohamed Hassan auf Pixabay
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