Affirm gets boost from New York Life with $750 million loan deal

Affirm is enhancing its collaboration with New York Life Insurance, marking a significant step that illustrates how traditional financial institutions are increasingly investing in fintech-driven consumer lending. The newly established agreement allows New York Life to acquire up to $750 million in Affirm's installment loans through 2026. This arrangement provides Affirm with crucial off-balance-sheet funding to support an estimated annual loan volume of approximately $1.75 billion. This partnership builds on a relationship that commenced in 2023, when New York Life initially began investing in Affirm's asset-backed securities and various loan structures. To date, the insurance company has invested nearly $2 billion into Affirm’s collateral pools. This move is part of a larger trend where insurers and private-credit investors are venturing further into consumer finance, particularly as rising interest rates make such assets more appealing. In recent years, Affirm has also secured funding lines with other major players, including Liberty Mutual Investments, PGIM, and Sixth Street Partners, reflecting a broader pattern within the buy-now-pay-later industry. Competitors like Klarna have established similar agreements with Nelnet and Pagaya, while PayPal entered into a substantial $7 billion deal with Blue Owl Capital, which has partnered with Meta on a $27 billion initiative to develop the Hyperion data center in Louisiana. With over $100 billion in transactions financed, Affirm reports that more than 90% of its borrowers are returning customers, a crucial aspect of its robust credit performance. This agreement with New York Life comes at a time when consumer lenders are navigating mixed economic indicators. While consumer spending remains strong and delinquency rates are declining, caution among investors persists due to recent bankruptcies in the subprime auto and consumer credit sectors.