Are PayBright's installment plans any good?

By   |   Verified by Nikita Sheth   |   Updated 15th April 2021

Finty review PayBright
  • PayBright is one of Canada's leading fintech firms offering "buy now pay later" services to Canadians.
  • Affirm, one of the global leaders in point-of-sale loans, acquired PayBright in a $246 million deal.
  • Offers interest-free installment plans and credit loans for larger purchases.

PayBright is a buy now pay later service made in Canada. In early 2021, it was acquired by Nasdaq-listed Affirm, Inc.[1], itself a global leader in consumer installment loans. PayBright offer point-of-sale "Pay in 4" and "Pay Monthly" installment plans, available at more than 7,000 stores nationwide.

If you are considering alternatives to using your credit card or PayPal account to fund your online and in-store purchases, PayBright could be worth considering instead. But before signing up, check out our review.

How does PayBright work?

PayBright is a buy now pay later financial services provider available to Canadians. The company offers you instant loans at point-of-sale (POS) to cover your purchases. Unlike other POS lenders, PayBright does an "instant credit check" on your status to determine your credit limit.

You have two options when choosing to take a PayBright loan.

  1. Pay in 4 – Pay off your loan in four payments, with your first installment due at checkout. There are no interest or processing fees charged on your purchase amount.
  2. Pay Monthly – Negotiate your payment terms to suit your needs. With this payment model, you'll need to pass a credit check to determine the APR the company charges on your loan.

PayBright is currently available at more than 7,000 online and offline retailers in Canada. The company is a legit firm, winning the award for Canada's Top Fintech Firm in 2017. [2]

The PayBright "Pay in 4" loan offers you interest-free repayments due every other week.

The "Pay Monthly" option is for big-ticket purchases, and it's not as widely available as the "Pay in 4" model. However, with this option, you get to spread your repayments out over a facility from 6 to 60 months.

You also get interest charges with the "Pay Monthly" facility, with monthly processing fees ranging from $1 to $4. If you decide on taking a 60-month loan, that means you could end up paying up to $240 in processing fees, aside from the interest.

If you miss a payment with the "Pay in 4" option, you'll receive a late penalty of $10. If you miss a payment on the "Pay Monthly" option, the late fee is $30.

Who is PayBright for?

PayBright is available to Canadians. You'll need to be at least 18 years old to open a PayBright account and finance a purchase. You'll also need a Canadian credit or debit card to link to your PayBright account. If you meet these lending criteria, you can apply for a PayBright account and start shopping.

As with most buy now pay later services, PayBright is more popular with younger users since it is seen as a way to finance lifestyle purchases without having the potential of accruing debt like you can with a credit card.

How does PayBright affect my credit score?

If you're taking a loan using the "Pay in 4" option, you won't have to worry about affecting your credit score. PayBright does a "soft" credit check to verify your identity, but it won't impact your score. The loan also doesn't reflect on your credit report.

However, the "Pay Monthly" option requires a hard credit check from PayBright. They work with credit bureaus like Experian and Transunion, and the enquiry will be recorded on your credit report. PayBright also reports your payment activity to the bureaus.

The ramification of this is twofold.

  • If you pay your “Pay Monthly” account on time, it can help to build your score.
  • If you miss a payment, it will go on your credit report and your credit score may drop.

Banks don't like you taking credit from third-party credit providers, but they can't see if you have a PayBright account. However, the bank will pull your credit report when reviewing a credit application and can see if you have outstanding "Pay Monthly" loans with PayBright, impacting your creditworthiness.

Since most bankst want you to use a small percentage of your income towards servicing debt, having a large loan may adversely affect your ability to get a loan with your bank or financial institution of choice.

What stores accept PayBright in Canada?

PayBright is available as a payment option at checkout at most of your favourite online and offline retailers and brands. Some of the places where you can use PayBright services include Samsung Stores, Browns Shoes, Wayfair Home and Furniture, Garage Fashion, and many more. A complete listing is available on their website.

PayBright vs. credit card

Is it better to pay using PayBright or a credit card? It depends. If you're using the PayBright "Pay in 4" plan, you won't have to pay any APR interest on your loan. You also don't have any processing fees. That makes the facility similar to a credit card offering you a 0% APR introductory deal, except you know it will be repaid in defined amount of time (unlike a credit card).

However, the "Pay Monthly" facility does charge your APR, depending on your credit score. The company also runs a credit check on you, which can affect the APR they charge.

With PayBright, you'll have to pay late fees if you miss a payment. Overall, the "Pay in 4" option is a good deal, while the "Pay Monthly" option is a bit expensive, but on-par with credit cards.

Pros and cons

Pros

  • Affordable point-of-sale loans.
  • Two payment models available – "Pay in 4" or "Pay Monthly".
  • No interest or processing fees on “Pay in 4” loans.
  • More than 7,000 retail partners in Canada with rapidly expanding coverage.

Cons

  • Late fees are expensive.
  • APR charged on “Pay Monthly” accounts.
  • Hard credit check required on "Pay Monthly" accounts.
  • Reports missed payments to the credit bureaus.

Alternatives

  • Afterpay: A leading Australian buy now pay later fintech offering easy point-of-sale loans for small purchases. The company serves Australians, Canadians, and Americans. You can take multiple loans up to $1,500 each, with a total account limit of $2,000. Afterpay doesn't charge any interest on loans, and you make four easy payments two weeks apart, with your first payment due on purchase at the point-of-sale (sort of like a deposit on the transaction).
  • Sezzle: A point-of-sale loan company offering buy now pay later services to more than 2.4 million customers in Canada and America. The company has retail partnerships with over 30,000 online merchants and leading retailers worldwide. You get the same four-installment payment model, with your first payment due at the point-of-sale.
  • Affirm: Acquired PayBright in a multi-million dollar deal. Listed on the Nasdaq in New York, Affirm offers point-of-sale loans, with credit limits up to $17,500. You also have multiple payment options for three, six, and twelve-month facilities.

FAQ

How do you fund your PayBright account?

Use your mobile phone to setup your PayBright account in minutes. Link it to your credit or debit card for automatic transactions.

Can you pay off PayBright earlier than scheduled?

Yes, you can pay down your PayBright account whenever you want to avoid interest charges and processing fees. There are no penalties for settling your account early.

How do I close my PayBright account?

Contact PayBright customer service. The service consultants will walk you through the steps to closing your account. After receiving your request, PayBright processes your account termination request in 30 business days or less.

What is the PayBright interest rate?

The PayBright "Pay-in-4" model doesn't have any interest charges. However, the PayBright Pay Monthly program comes with APR between 0% to 29%, depending on your credit score.

Can I increase my PayBright credit limit?

PayBright can't increase your credit limit. However, the platform automatically assigns you the highest limit possible in relation to your credit score.

How does PayBright make money?

PayBright uses three methods of making money, including processing fees, merchant fees, and interest charges. The merchant you're purchasing from online pays PayBright a fee for using them to broker the transaction. Merchant fees are between 2% to 5%, depending on the agreement.

Article sources

1 Affirm. "Affirm Completes Acquisition of PayBright, https://www.affirm.com/press/releases/affirm-completes-paybright-acquisition". January 4, 2021.

2 PR Newswire. "PayBright named Canada's FinTech Company of the Year, https://www.prnewswire.com/news-releases/paybright-named-canadas-fintech-company-of-the-year-300961662.html". November 20, 2019.