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PayPal Credit brings interest-free loans to the UK

PayPal has launched a new instalment-based online payment system in the UK called PayPal Credit.

As the name suggests, PayPal Credit operates much like your credit card. With it, you can make PayPal payments even when you don’t have any funds in your account, essentially borrowing the necessary funds.

What’s more, you can get zero percent interest on purchases of over £150 for the first four months. After that point, you’ll be subject to the standard interest rate of 17.9 percent, which is based on an assumed credit limit of £1,200.

The best thing about that four month interest free period is that it isn’t a limited offer, as such things tend to be with standard credit cards. It’s there every time you need to make a larger purchase.

This being a credit agreement, you’ll need to go through a credit check with PayPal to secure your PayPal Credit.

Unlike standard credit cards, however, you’re limited in that the site you’re purchasing from has to support PayPal payments.

Related: PayPal’s new refund deal is a hit, but sellers are furious

In addition, PayPal has teamed up with a string of UK retailers to establish extended individual interest rates. Blacks, Chain Reaction Cycles, Dyson, Millets, Samsung, Simply Games and Ultimate Outdoors have all signed up.

The UK is only the second territory to receive such a PayPal service after the US. PayPal’s home territory received the service back in 2014, which is also when trials of the service commenced in the UK.

Will you be using PayPal Credit for your online purchases? Let us know in the comments.