Aside from the obvious advantages – the ease of application process, accessibility, and speed – providers of payday loans reward customer loyalty. Payday lending is a legal business provided in most US states, and it is in the lenders’ best interests to encourage repeat use aside from attracting new customers. So, how is it done today?
The benefits are two-fold. Repeat borrowers are eligible for lower interest rates and higher loans. Of course, this requires timely repayment. It is important to remember that local legislation caps loan amounts in different US states. A first-time borrower, especially one with little credit history, does not always secure the maximum sum, as payday lenders may start with smaller amounts to confirm their reliability.
As payday lending requires no collateral, it is often accessed by Americans typically rejected by conventional banks due to insufficient income. By following the conditions carefully and repaying the debts properly, a borrower proves they are reliable and can afford larger loans. Therefore, the more times you borrow, the cheaper your borrowing becomes, and the bigger sums are approved. With time and patience, you may gradually improve your well-being by taking advantage of this option repeatedly.
Additionally, successful repayment of multiple loans is bound to improve one’s credit history. Here, payday loans are especially helpful for those who have limited or zero borrowing experience and are thus prevented from using alternative loans. Some payday lenders even consider applicants with bad credit history, who will improve their records by paying on time.
Benefits of Payday Loans
Payday borrowing is quick and convenient. With the expediency of online services, a payday loan can be arranged remotely, with the lender quickly depositing the borrowed sum and later withdrawing the amounts they are owed, which requires direct debit permission or post-dated checks. All verification procedures are also remote – using third-party services, such as credit bureau databases or other financial records.
The interest rate and all possible charges are always disclosed, and a borrower may compare APRs of different lenders. However, what matters the most is the simple interest rate – i.e., how much your short-term loan will actually cost. On average, each $100 borrowed adds $15 as interest, which amounts to 15% simple rate. Additional fees usually apply to borrowers failing to repay, who may, however, use rollovers to reduce penalties. If the agreement is read and studied carefully, the due date will bring no surprises.
Thus, as you see, payday lenders prize customer loyalty. When used wisely, their loans may become a regular and convenient source of additional money. By borrowing and spending wisely, you improve your credit history, make your loans cheaper, and improve your finances overall.