PayPal Pay in 4 installment plan is a service that allows you to split the cost of eligible purchases between $30 and $1,000 into four equal, interest-free payments. The payments are automatically scheduled every two weeks.
This can be a handy option for making larger purchases more affordable. Rather than paying for the whole cost upfront, you can spread the payments out over two months. This gives you more time to cover the expense within your monthly budget.
However, Pay in 4 does come with some drawbacks. There are eligibility requirements and late fees you’ll need to consider. You’ll also have a soft credit check, which can impact your credit score if you miss payments.
In this article, We’ll walk you through how Pay in 4 works, the pros and cons, and who might benefit from it the most. We’ll look at eligibility requirements, payment schedules, credit limits, and late fees. We’ll also compare Pay in 4 to other payment options like credit cards and store financing.
What is PayPal Pay in 4?
PayPal Pay in 4 allows you to split the cost of eligible purchases between $30 and $1,000 into four equal, interest-free installments that are scheduled automatically every two weeks.
Once you’re approved, you can choose the Pay in 4 option at online checkout when making an eligible purchase through PayPal. The total cost will be divided into four payments of equal amounts, and PayPal will schedule the payments every other Friday over the next two months.
When you select Pay in 4, PayPal will first conduct a soft credit inquiry to check your creditworthiness. This type of soft check has little to no impact on your credit score as long as you make all four payments on time.
Pay in 4 is primarily designed for consumers looking for an affordable way to finance larger purchases without interest charges. Rather than paying for the whole cost upfront, you have two months to cover the expense within your budget.
To use Pay in 4, your PayPal account must be in good standing. Purchases must fall within $30 to $1,000, and you must be located in either the U.S., U.K., or Australia. Each eligible purchase will have a custom credit limit based on the soft credit check results.
If you miss a scheduled payment or make a late payment, you may incur fees. After two missed payments, PayPal can suspend your Pay in 4 eligibility until you’re in good standing again.
How does PayPal Pay in 4 work?
Using PayPal Pay in 4 is simple and straightforward. Here are the basic steps:
- When checking out with an eligible purchase between $30 and $1,000 on a PayPal-enabled site, select the Pay in 4 option.
- PayPal will perform a soft credit check and approve you if eligible. They’ll let you know your installment schedule and payments.
- Your total purchase amount will be divided into 4 equal installments. PayPal will automatically schedule the payments to be made every other Friday over the next 2 months.
- You’ll receive payment reminders from PayPal before each due date. The scheduled payments will be automatically deducted from your linked bank account or credit card on file.
- If you miss a payment, PayPal will attempt to collect the payment for up to 30 days. If you still don’t pay, you’ll be charged a missed payment fee.
- After two missed payments, PayPal can suspend your ability to use Pay in 4 until you’re in good standing again. You’ll still be responsible for the total purchase amount.
- Once you’ve made all 4 payments, your order will be fulfilled and shipped by the merchant. Your PayPal account balance will show $0 for that purchase.
Overall, the checkout and payment process with Pay in 4 is seamless and hands-off once you’re approved. Just make sure to review your payment schedule and due dates to avoid missed payment fees.
The installments are drafted automatically from your selected payment method, so no additional action is required from you as long as you have sufficient funds on those due dates.
Pros of PayPal Pay in 4
PayPal Pay in 4 has some clear potential benefits for consumers looking for an affordable payment option for larger purchases. Here are the main pros:
Interest-free financing: Pay in 4 offers financing for purchases between $30 to $1,000 completely free of interest charges. You split the cost into 4 equal installments without paying any extra to spread out the payments. This can save you money compared to credit cards with high-interest rates.
Splits larger purchases into installments: Pay in 4 is perfect for making once-big purchases more manageable by dividing the total into 4 payments over 2 months. This can help fit a larger expense within your monthly cash flow that you wouldn’t otherwise be able to afford in one lump sum payment.
Soft credit check has a minimal impact: Unlike a hard credit inquiry, the soft check PayPal runs to approve you for Pay in 4 and typically has no impact on your credit score. As long as you make all payments on time, it shouldn’t affect your creditworthiness.
Convenient and accessible: Pay in 4 is integrated directly within PayPal’s checkout flow. Once approved, you don’t have to apply for a separate credit card or loan. All payments are made seamlessly within your existing PayPal account.
Fast approval process: Because PayPal already has your financial information and payment history, they can quickly approve you for Pay in 4 at online checkout. You usually get an instant decision so you can complete your purchase.
No fees to use the service: Provided you make all 4 payments on time, there are no fees or charges associated with using PayPal’s Pay in 4 installment plan. You only pay the full purchase price split into 4 individual payments.
Cons of PayPal Pay in 4
While PayPal’s Pay in 4 installment plan provides interest-free financing for eligible purchases, there are still some potential drawbacks to consider:
Limited availability: Pay in 4 is currently only available in the U.S., U.K., and Australia. If you live in other countries, you won’t have access to this financing option through PayPal.
Late fees for missed payments: If you miss a scheduled payment, PayPal will likely charge you a late fee. After two missed payments, your Pay in 4 eligibility may be suspended until you’re in good standing again.
Lower credit limits: Your approved Pay in 4 credit limit for each purchase will likely be lower than a traditional credit card limit. This may limit your ability to use Pay in 4 for higher-priced items.
A soft credit check is still visible: Though a soft credit inquiry has minimal impact, it still shows up on your credit report and is visible to future lenders. This could potentially count against you if a lender manually reviews your applications.
No buyer protection: Since you’re not using a credit card to make the purchase, you won’t have the same protections if an item arrives damaged or doesn’t match the seller’s description. You’ll have to work directly with the merchant for refunds or returns.
Must commit to regular payments: Using Pay in 4 requires discipline to make all 4 installment payments on time over the 2-month period. You’ll be responsible for the total cost of the purchase even if you can no longer afford a payment.
High missed payment fees: The fees for missing a Pay in 4 payment can be significant, effectively negating any savings from interest-free installments.
Should you use Pay in 4?
Whether or not PayPal’s Pay in 4 installment plan is a good option for you depends on several factors:
• Your ability and discipline to make all 4 on-time payments. Pay in 4 requires commitment since you’re responsible for the total purchase amount.
• The size of the purchase and if it’s worth splitting into installments. Pay in 4 is best suited for larger purchases between $30 and $1,000.
• Alternative financing options available to you. Pay in 4 may not be your best option if you have access to low-interest credit cards or store financing with similar benefits.
• Your tolerance for risk. There are downsides like late fees, impact on your credit, and lack of buyer protection. You must weigh these risks versus the benefits of interest-free installments.
Conclusion
In summary, PayPal’s Pay in 4 installment plan provides an easy and accessible way to divide larger purchases between $30 and $1,000 into 4 interest-free payments. By spreading the cost out over two months, Pay in 4 can make expensive items seem more affordable and fit within your monthly budget.
However, there are drawbacks to consider like late fees, lower credit limits, and the soft credit check. You’ll need to determine if the flexibility of installments outweighs these potential risks for your specific purchase and financial situation.
Alternative financing options may offer more benefits and protections, so be sure to compare your options before selecting Pay in 4. With the right eligibility, spending habits, and commitment to the scheduled payments, Pay in 4 can be a convenient payment solution for splitting larger purchases into interest-free installments.
Overall, PayPal’s Pay in 4 installment plan may be recommended for users who need an easy way to finance a purchase between $30 and $1,000 without incurring interest charges. Just be sure to weigh the potential pros and cons based on your unique circumstances.
