CEO said today that they are extremely well capitalized in all aspects of their business.

Probably not.

How does affirm make money, fees from sellers or buyers? Every time I see their service offered it is at 0% over however long. I've never used it so I'm unaware of their fee structure.

Sea Speed said:

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How does affirm make money, fees from sellers or buyers? Every time I see their service offered it is at 0% over however long. I've never used it so I'm unaware of their fee structure.

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Their target borrower will not maintain on-time payments to keep that 0% rate. My guess is the default interest rate is > 20%

Diggity said:

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I would seriously doubt that default rate but probably easy to research.

From what I've see, they get paid by the seller to offer those artificially low rates. Helps move more product when you can get a Peloton for $60/month rather than $3K up front.

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To clarify I mean the interest rate charged when the borrower goes in to default.

Even for a typical conventional bank car loan the default interest is 18% in Texas.

RockOn said:

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Sea Speed said:

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How does affirm make money, fees from sellers or buyers? Every time I see their service offered it is at 0% over however long. I've never used it so I'm unaware of their fee structure.

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Their target borrower will not maintain on-time payments to keep that 0% rate. My guess is the default interest rate is > 20%

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I've heard somewhere that 3.1% of credit card accounts default each quarter. So 12.4% is the annual default rate of credit card accounts over the course of a year.

Affirm might have a higher right as its such an impulse.

RockOn said:

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Diggity said:

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I would seriously doubt that default rate but probably easy to research.

From what I've see, they get paid by the seller to offer those artificially low rates. Helps move more product when you can get a Peloton for $60/month rather than $3K up front.

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To clarify I mean the interest rate charged when the borrower goes in to default.

Even for a typical conventional bank car loan the default interest is 18% in Texas.

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Gotcha...that makes sense

Diggity is right. Affirm gets an upfront fee on the sale from the product seller.

Shifts collection risk to affirm from the seller at a one time fixed cost. "Micro-pay".

This has been going on for years and years in the medical world. Ever wonder how that 24yr old got those new set of titties? She's paying $150/month for the next 5-7 years.

Yes, they also get credit card interest rates on defaults.

I've used affirm on a lot of things. 0% interest is fine with me!

Mas89 said:

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There are several other ways for a 24 year old to get new titties…

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Besides the obvious sugar daddy or stripping… yeah

Rule 1?

I've never heard of Affirm. I feel left out.

YouBet said:

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Rule 1?

I've never heard of Affirm. I feel left out.

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Micro loan platform typically available at checkout for certain products. Here's a TV from Target for example.

Interesting. Thanks.

Affirm lost me when it became public information that they were holding their highest risk loans.

When they just got paid for making loans and placing them, that was an attractive business.

But when they made loans to borrowers with poor credit AND couldn't place those loans, Affirm was stuck with them and that means credit risk from the most unworthy borrowers.

And the CEO didn't divulge they were taking on that credit risk until Affirm's loan portfolio was big.

Everyone seems to know there's a consumer credit train crash coming.

Affirm is the business most squarely situated on top of the train tracks of that oncoming train. Their business model is literally based on taking that risk for retailers.

More power to you if you make money investing in that.

Remember we are still in Fridays range. Could squeeze but could also fail.

TSLA will print a 1XX handle soon.

You think TSLA is a buy around here or keep waiting? Or dollar cost average on a stock I want to be in.

I don't think it's bottomed.