They make money because they know that if you need to use Klarna to finance a €300 purchase you are very likely to default on the loan and pay interest.

> So how do they make money?

Generally the logic on "free" financing by the seller is that without it, they may have not made a sale at all. Sure it cuts into their margins, but offering rebates would have had a similar effect.

Klarna probably still charges the vendor a few bucks for handling the thing.

He can't predict the future. The relevant metric must be

1. The chance, weighted by amount, of a price hike/salary increase

2. The chance, weighted by amount, of a price decline/salary decrease.

As inflation is generally an upward trend, clearly no. 1 is more likely and thus the best bet.

The price of the phone and the installment amounts are fixed at purchase. If there is a positive inflation rate you are guaranteed to make a real saving (but not a nominal one) by paying some of the purchase amount later on. What happens to your salary or the price of the phone later has nothing to do with it.

Or if there was literally anything else he'd prefer to buy up front than wait until he'd saved up enough to replace the cost of the phone.

Just by keeping that money in a savings account you'd save something.