PayPal co-founder Max Levchin
has launched a new money system called “Affirm”
A recent article described this new method of borrowing money (and
replaying it) as best suited for young adults ages 18 to 34. This age group
doesn’t like borrowing small amounts of money from banks, and who are normally
considered high risk customers for banks. And credit card interest is quite
high, so that’s not really acceptable either. Nonetheless these age folks need mattresses,
TV’s, and beds, and are willing to pay for them in monthly payments to spread
out the impact cost. But they don’t want to open up store accounts or use high
interest credit cards, or pay hidden fees.
Enter Affirm. You pay much like Apple Pay, only you can
select the number of payments you make, and get reasonable interest (10% ?) and
can see the total interest cost you will pay based on the loan terms you select
at the point of sale.
A big catch is, the store
must be an Affirm Participant. But
otherwise, it appears (on the website) to be a very slick and easy way to pay
for a big ticket purchase with a micro-loan and a few payments over time.
Similar to some micro-lending
system I have read about overseas, this one has some simplicity advantages and
doesn’t require a co-signer. I could see this as a workable way for some
segment of the population to get things they need, and pay for them over time
as they “use the product”. Certainly
this beats pay-day loans, and credit card interest rates. Maybe its day has come.
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