Affirm’s New Funding: A $4 Billion Boost for Buy Now, Pay Later

Affirm Holdings, a popular buy now, pay later company, just scored a massive deal. Private credit firm Sixth Street is investing $4 billion over the next three years to help Affirm make more loans. These loans are typically for four to six months, and the deal could lead to over $20 billion in loans over time. This is good news for Affirm, as it means more people can use their services to shop now and pay later. The financial world is changing fast. Private credit is growing, and fintech companies like Affirm are finding new ways to get money. They don't rely on banks like they used to. Instead, they use things like warehouse facilities and asset-backed securitizations. This deal with Sixth Street is a forward flow agreement, which means Sixth Street will buy loans from Affirm as they happen. Banks aren't completely out of the picture, though. They still help finance these loans, but now they're doing it alongside private-credit funds. It's like they're teaming up to make sure there's enough money for all these buy now, pay later loans. Affirm's funding capacity has grown by 130% over the past three years, reaching $16. 8 billion as of September. That's a lot of money to help people buy stuff now and pay later. The deals are pretty fair, with interest rates between 0% and 36%, depending on what you buy and how likely you are to pay back the loan. If you're late, you don't get hit with extra fees, which is nice. As of September, Affirm's delinquency rate was only 2. 8%.