Instant Loans at Checkout: helpful or hurtful? - - Jackson, MS

Instant Loans at Checkout: helpful or hurtful?

Source: WLBT Source: WLBT
Source: WLBT Source: WLBT
Source: WLBT Source: WLBT
Source: WLBT Source: WLBT
Source: WLBT Source: WLBT
JACKSON, MS (Mississippi News Now) -

An $800 mattress for your bed. A $600 sofa for your living room. A vintage designer bag as a Christmas gift for your best friend.  They're all pretty big purchases to buy online, but now you can get an instant loan for any of them right at checkout. 

"Our first goal is to reinvent credit," says Julie Ingle with Affirm, one of several companies that now offer the Instant Shopping Loans, also called Point of Sale Loans. 

Ingle says the payment plans are different than credit card options. Companies like Affirm partner with certain retailers to offer the loans, which are installment loans with interest rates, and set payments are made over time. 

"We don't charge late fees, we don't charge deferred interest; we don't charge compounding interest. So, it's a simple interest product,"  she says. 

But not so fast. A Brookhaven-based credit repair specialist says simple interest is still interest, and whether you're applying for that credit in stores or online, it's still going to ding your credit report. 

"Credit is one of those things we are not taught in schools," Akira Dixon says, adding that Instant Shopping Loans may not always be a good idea. 

"You don't have time to read fine print so you don't get to see those interest rates," she tells us. "A lot of people don't know that the effects of even applying for credit also takes a hit on your credit score and your credit report." 

Applying for credit isn't always a bad thing. Ingle says sometimes it helps you build your credit.  

"You actually are bidding, building more history and more of a credit profile," Ingle says.  

But as you pay your installments with Affirm, and with credit cards too, you still end up paying more than the cost of the product itself.

At Christmastime, when most people have a lot to buy, Dixon recommends making a strategic gift buying list, and sticking to it. Also, she suggests we consider shopping with cash, not credit. 

"When you're in the stores and you're charging debt, charging debt, charging debt, and you think I can pay it off when I get paid, sooner or later Christmas debt turns into Easter debt, then it turns into Thanksgiving debt," she reminds us. 

Nerdwallet's Liz Weston says, if you encounter an instant loan at a checkout, in store or online, don't feel rushed into making a decision. 

"Take a minute, pause, and do some research to understand what you're getting into," Weston says. 

Click here to learn more strategies to spend wisely during the holidays and the new year. 

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