A paperless loan is a financial transaction in which one party (i.e. the lender) agrees to give another party (i.e. the borrower) a certain amount of money with the expectation of repayment together with the fee agreed upon by both parties solely online or over the phone. The predominant difference of a traditional loan compared to the paperless loan lies within its paperless application process and the absence of interest. Instead of charging borrowers an interest rate, lenders will charge a fee that may range from $10 to $30 for each borrowed $100. Plenty of paper agreements can be avoided as lenders do not require a written proof of employment or income since such information can be confirmed with the aid of online databases.
Paperless loans are usually from a minimum of $100 to a maximum of $1,500 with an average amount varying between $200 and $500. The exact eligible amount is determined when applying and depends on an income reported by the customer.
Some people argue that paperless payday lenders target fragile people, such as low-income communities, emphasizing the ease of getting a loan regardless of the target audience being fragile and unfamiliar with the repaying process.