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Beware of this purchase option with Paypal and Klarna

Around “Black Friday” many are bargain hunting. Online shops attract with an easy payment option. But she has a problem.

From ‘Singles’ Day’ to ‘Black Week’ to ‘Cyber ​​Monday’ – there are plenty of opportunities to do business in November. But those who use the installment financing of the large online payment services Paypal or Klarna for shopping sometimes pay significantly more, as a sample analysis of the comparison portal

Verivox shows.

Klarna charged 12.90% interest when making a test purchase for a 2-year installment loan. For a notebook worth 2,500 euros, the interest costs add up to a total of 328 euros under these conditions. A total of 535 euros of interest is incurred for the financing of a sofa set at the price of 4,079 euros. The cost of a cheap installment loan is not even half.

With an interest rate of 9.99%, installment financing with Paypal is slightly cheaper. The additional costs for financing the notebook amount to 255 euros there, for the living room furniture a total of 416 euros in interest expense is due.

“Installment payment via payment services such as Paypal or Klarna is extremely convenient for consumers because it is very easily integrated into the ordering process in many online shops. The installment purchase is completed with just a few mouse clicks,” says Verivox Managing Director Oliver Maier. “However, this convenience is often bought at a high price. If you finance the purchase with a cheap bank loan, you pay much less interest.”

The evaluation shows that the majority of customers get a loan of the requested amount at an interest rate of 4.49% or higher from cheap banks. For the financing of the notebook, which costs 2,500 euros, only a total of 116 euros of interest accrued under these conditions over two years. For the furniture in the living room it would be 190 euros.

Compared to financing through Klarna, installment borrowers would save 65% on interest costs. Compared to PayPal financing, the savings are 54%.

The so-called two-thirds interest rate was assessed. This mandatory information for banks is representative of a wide range of customer groups. Two-thirds of all customers get the loan at this interest rate or less.

However, financing with an installment loan is not an option for all consumer wishes. Most banks will not grant loans for amounts of less than €1,000. If consumers want to pay for small purchases in installments, installment purchase via the payment service may be a suitable solution.

“But anyone who pays regularly in installments can easily lose track,” warns Maier. “Any funding increases running costs. If there are additional unforeseen burdens, as currently due to rising energy and food prices, the family budget can become tight.”

In turn, debt restructuring with a simultaneous extension of the repayment term can help reduce the monthly burden of installment payments.

“While customers can stretch payments with Klarna and Paypal for up to 24 months, even longer terms are possible with an installment loan,” says Maier. But it’s important to know: “The more time consumers give to pay off their debts, the more time they have to pay interest. This drives up overall costs.”

For the entire 36-month period of the renegotiation loan, a total of 218 euros of interest expense would be incurred. That is 107 euros more than the same loan would cost without extension of the duration. Due to the significantly lower interest rate, the total costs are reduced by 95 euros compared to the Klarna financing, despite the term extension.

Around “Black Friday” many are bargain hunting. Online shops attract with an easy payment option. But she has a problem.

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