Payment services make online shopping very easy and convenient. With just a few clicks you can pay the bill – or arrange an installment purchase. But the seemingly simple loans are costly.
A few clicks and the product is purchased from the online shop and is as good as paid for. To make it as easy as possible for customers to pay, many online retailers offer processing via payment services in addition to the classic bank transfer or paying with a credit card. You will automatically be redirected to a payment form from Klarna, PayPal, Amazon or Google Pay; only a few clicks and data are required to pay for a product. To make it even easier, you can also download the respective service provider’s app onto your smartphone free of charge.
Any type of goods can be paid for – including larger and, above all, more expensive purchases such as laptops, televisions or furniture. If you pay the amount all at once, the merchant has to pay the fees to the payment service. But not everyone can easily pay large amounts. That’s why the payment services also offer installment payments. If you want to take advantage of it, you should first check whether interest is due or whether it is zero percent financing. Stiftung Warentest points this out. Because if it is an interest-bearing installment purchase, it can be quite expensive for consumers.
Sometimes over 13 percent interest
The comparison portal Verivox carried out a comparison calculation and made test purchases online on a deadline in October 2023. Among other things, a notebook worth 2,236 euros was purchased. For the installment loan with a term of two years, the interest at Klarna was 13.6 percent and at PayPal it was 10.99 percent. “The interest costs under these conditions amounted to a total of 309 euros,” says Verivox press spokeswoman Jessica Kühnel. The comparison portal found that an installment loan from a bank would have been significantly cheaper at 7.19 percent.
So if you’re making a purchase over 500 euros, you shouldn’t be seduced by seemingly convenient loan offers via payment services. It is better to compare loans. “Young people in particular are open to these new payment methods – buy now, pay later,” says Kühnel. In an online survey commissioned by Verivox among people between the ages of 18 and 79, almost one in three between the ages of 18 and 39 said they used payment services, including installment loans.
Negative Schufa entry as a risk
Many people are not even aware that such financing can lead to a negative Schufa entry if it is not paid off, says Kühnel. This, in turn, can easily happen if several financing transactions are carried out at the same time via a payment service and you lose track.
Then it makes sense to look for a cheap bank loan and bundle the individual financing into one. If that’s too much effort for you, you can choose interest-free financing from Klarna with just a few more clicks.
Stricter EU rules for small loans
In November 2023, the EU tightened the guidelines for consumer credit, including for small loans. Consumers in the EU have the right to better information about credit. Banks and other lenders must therefore do a better job of checking whether people can actually afford the loan and repay it later. In addition, consumers should be able to withdraw from credit agreements within 14 days without giving reasons.
The new guidelines are intended to better protect low-income households in particular. Whether all the rules are implemented is partly left to the member states themselves. In general, Germany and the other EU states must implement the requirements into national law within two years.