Not everyone trusts the banks, especially when it comes down to borrowing money. When you’re done paying off the load along with interest, you’ll probably end up paying nearly 50 percent or more of the amount borrowed.
Paypal co-founder Max Levchin seems to know what’s up, which is why he created a company known as Affirm back in 2012. The idea behind Affirm is to make it possible for people to purchase items on the web when they lack the cash to do so.
Basically, a consumer would venture off to any website that supports Affirm, and purchase items using money loaded. The interest rate according to the company ranges from 15 percent to 30 percent, and it depends on the amount of cash taken on loan.
How does Affirm decide who to loan cash
The company is trying to be a honest lender, so it has no intentions to set up credit lines for any customer who is not able to afford them. Instead, Affirm gives a loan based on a user’s credit rating and the ability for the same user to repay.
To get up and running with Affirm, folks must first provide a proof of identity, and that includes sharing the final four digits of social security.
Guess what? There’s an app for that
Now then, five years after the announcement of the program, Levchin is finally stepping up its game by making sure his company has its own Android and iOS app. Yes, it’s possible to take advantage of what Affirm has to offer by downloading an app.
Unlike PayPal and other services that are never clear on fees, Affirm wants to make sure all users know what they’re getting themselves into before taking the dive.
“Credit today is broken — primarily because the incentives for banks that issue it are built on business models that profit from consumers’ failure,” said Levchin. “Our mission is to fix this inherently broken model. The future of credit is not a traditional card, it’s a modern app that puts consumers in control, helping them use credit simply and deliberately while giving them more confidence over their financial lives.”
The big question is, will consumers gravitate towards what Affirm is selling? The entire plan is a great idea, but it will be difficult for the company to compete with banks. However, with consumers having little faith in banks due to several hidden fees among other things, Affirm could find a place for itself.
So far, the service has over 1,000 retail partners, and with 1 million loans issued since launch, Levchin and his team might have a winner on their hands.