In the Promotions section, you can find offers of payday loans that you can get for free. This means that we will repay exactly the same as we get, without any costs, interest, commission or preparation fees.

The question arises – so how do loan companies make money? The obvious truth is that there is nothing for free and the company counts on making a profit by taking action.

How do loan companies work?

How do loan companies work?

Loan companies need a lot of money to be able to grant loans. This capital can be borrowed, which costs companies from a few to several percents, it can also be shareholders’ money.

In the latter case, they bear the so-called opportunity cost, i.e. the opportunity to make a profit from another investment, e.g. deposit or investing in bonds. Therefore, when they incur costs, companies must cover them with something.

What do companies earn by providing free loans?

What do companies earn by providing free loans?

The assumption of all free loans is to get as many loan applications as possible. Of course, with free payday loans, companies reject more applications than usual. This is because they do not charge additional costs that could be used to cover unpaid quick loans taken out by unreliable customers.

If we pay off the promotional loan on time, we do not incur additional costs. However, a large proportion of the loans are extended and the extensions are already paid for, and much more than the first loan.

Database of loan companies

loan companies

So remember to take free loans carefully, as they can become our path to serious debts. However, if customers pay back the loan or don’t get it, the loan company is building a database. Clients who have repaid the loan will turn to the company where they have already received the money if they need to receive another one. It is also likely that such a company will call us, send an SMS or an e-mail with a loan proposal.

And clients whose applications have been rejected can expect payday loans, but on worse terms than compensate the loan company for the risk. In addition, a lending company can also offer other products to clients who have applied for a loan and have agreed to process their personal data for marketing purposes, e.g. insurance, installment loans or an offer from outside the industry, such as switching energy suppliers.

Benefits of a free loan

Using free loans is a very good solution because we receive free capital, which in the bank costs us above 10%. To show you the benefits, we’ll give you an example – we’ll use a free payday loan at Vivus, where after receiving a loan of USD 1,200 for 30 days, click the link below and open a deposit at Bank for 1 month with an interest rate of 5.1%.

In this way, we earn over USD 60 without any effort. However, we should remember that the borrowed money should be returned on time, because after 30 days the costs are much higher than the profit on the deposit and even in the case of cheap Vivus, it will be 14% on a 30-day scale.