Payfully loans - Are we safe to do that?

Which “blanket statement” about how U.S. taxes work is incorrect? Yes, you were clearly implying that I said tax deductible means free. Here is the quote.

And of course tax deductible does not mean “free.”

Anyone who is considering using Payfully. As they debit your account if you cancel a reservation, you give them access to your bank account. Do you trust them?

1 Like

I feel like I should chime in here, and defend Playfully as a legit company that is not a ‘scam’ and will not ruin your bank account. Remember, we give ABB our bank account info as well!

After the first thread on Payfully here, I set up and account on Payfully just to see what is was all about, the TOS, how much they were really charging etc. I spoke with a a great rep, forget their name, and was offered a free trial. Given that I didn’t have an immediate need for the money, I decided to use the free trail on my next reservation, to test out the service.

I have a strict cancellation policy so I felt confident taking the the Payfully loan for a reservation that was at the 7 Day cancellation mark, so that if the guests were to cancel I would get paid anyway. As other have stated if the guest found a bed bug, rodent, or something out of my control happened, and they cancelled and were refunded via ABB, I would have been on the hook for the loan the amount.

Also, note based on your ABB history and number of upcoming reservations, you will have a ‘limit’ of how much you can take as a loan. Mine was $2500, so the reservation I ‘loaned’ against was somewhere around $5k but i was only given $2500. Payfully said the limit increases if you successfully payback loans etc, but if you are using payfully on a regular basis there are some other issues we should be talking about.

The process was simple, I picked a reservation it showed the ‘Fee’ which bc the reservation was less than a certain time period away was about 3%. The fee increases the further out the reservation is. For example I just logged into my Payfully account to write this and the fee for an advance on a reservation 16 days out is 3% and 6% on a reservation 48 days out. So, cheaper than using a credit card.

Once you select the reservation you want to borrow against you click the ‘apply’ button, and there’s a DocUsign-esque document that you basically agree to have Playfully debit your bank account X amount of days after checkin, to repay the loan you took from them. I signed the doc, was approved, and money was in my account in 48 hours. They have now reduced the the time period to 24 hours.

Re-Payment was just as simple, I think it was 2-3 days after my reservation checked in, Payfully deducted the loan amount, and all was right in the world.

As other have clearly outlined, if you can’t pay back the loan, don’t use this service. However, Payfully makes it pretty idiot proof. I’m sure you could use the Payfully loan, then use your ABB payout before Payfully collects, but then you would be in a world of hurt. Doesn’t seem worth it.

I agree with the few posters that this is a good SHORT TERM option if you are in a real pickle and need cash. I think the comments about a 2nd mortgage for $2000 seems a bit silly, and if you need cash immediately, waiting 60 days for a HELOC/2nd mortgage to close is not the best option. Like with any type of credit, you need to be careful and not abuse Payfully.

As for Payfully being predatory, how are they any more predatory that Credit Cards? They are not forcing you to use their service, they are given you a very competitive interest rate and our just another company in the ‘short term loan’ space. This is clearly a better option for people in need, versus going to a ‘Pay Day Loan’ center of something or equal elk.

Hope my 2 units of currency was helpful!

(Other than the free trail I got on my own volition for having $20k of pending reservations, I was given nothing for writing this, and I’m not affiliated with Payfully)

9 Likes

Thanks for the clarification.

Here in the UK it would still be much easier and better value to go for an interest free credit card

  1. There is no interest
  2. You have a much longer repayment period (a year)

Can’t see any advantage to using Payfully in terms of my personal situation.

3 Likes

You and I are not the target audience for this type of short term loan. This is for people who need immediate cash for XYZ reason. The benefit to Payfully is the cash is in your account within in 24 hours and even 0 interest credit cards still have fees for ‘cash advances’.

3 Likes

Assuming you can get a 0% credit card @Helsi. The type of person who may want to use payfully is likely to not have access to that. I for example can no longer get a 0% credit card as I am no longer in employment …Airbnb is my sole income. In this situation traditional lending won’t work because Airbnb is a concept traditional lenders don’t understand …

I’m not at all in the road to financial ruin as it has been put on this thread, however if I needed money urgently (let’s say to pay for some urgent repairs) I would struggle to raise a loan or get a credit card the traditional way .

3 Likes

Perhaps it is somewhat difficult for those of us with no cash flow issues to conceptualize the possible need for a service like this. Thanks @azreala for testing it and reporting back.

2 Likes

I think @Zandra hit the nail on the head…there are many people out there who rely on ABB + other types of non-traditional income that traditional lenders/banks don’t recognize. Payfully is relatively low cost way to help these people out and anyone it a pinch out.

As @KKC very eloquently put its hard to conceptualize if you are not in the situation. I was curious and given the talk about it here on the forum, thought I would give it a go to see what it was about. However, I know many many hosts that would not have even thought twice about it bc the product is not target to them. It interested me bc I thought it was a cool concept.

2 Likes

I’m glad you did. Thanks Az :slight_smile:

1 Like

No problem! Like I said I think it’s a cool concept, I know these type of companies exist for Uber/Lyft drivers. I actually think companies like this help break the ‘predatory lending’ cycle of Payday Loan Shops here in the US, which charge 30% + interest for short term loans. Given how negative people were on the forum about this company I wanted to dispel some of the misnomers and fears. Glad it helped!

@Zandra I only tried it out on a US property, with payout to a US bank, so I’m not sure about Intl banks. Payfully did see my reservations for Barcelona, and would have let me chose one of them to ‘advance’, but I’m not sure about foreign bank account. If I get another free trail I will gladly try it out with our Euro bank account and report back.

1 Like

That would be be exceptionally useful @azreala.

I’m lucky; I don’t have any problems with cash flow as I have savings and my old credit accounts, however this is only because I used to have a very well paid job. The fact is they could decide to withdraw the credit limit at any point and then I could easily go from having no problems with cash flow to having issues. And Payfully seem to be genuinely trying to fill a gap in the market.

Really I appreciate the research you did it was invaluable.

2 Likes

I still think that this type of loan is risky.

What happens if you borrow $5,000 based on future earnings to redo your bathroom and the contractor disappears or finds dry rot extending the project timeline, resulting in the cancelation of the bookings since now you don’t have a bathroom? Do they call the loan the minute the booking that secured it cancels? Give you a grace period so you can pay back the loan with your regular earnings?

Borrowing money for short term is a risky business, and should only be done when all other options have been explored. This type of loan has sunk some very smart and aggressive folks in my life. I have lived through two booms where people I knew leveraged themselves as far as they could, and when that bust came, they were left with nothing but bankruptcy court. And now that bankruptcy disallows so many kinds of debt, they would still have a substantial amount of debt to pay off.

2 Likes

Good point @Zandra.

You might also want to look at local credit unions - they are far more flexible than the banks for lending money. They base it on how much you save each month, rather than earnings.

Unfortunately my BNB doesn’t bring in the income I need to give up work. Would love it, if it did :slight_smile:

@Zandra Are there Credit Unions in the UK?

There are ! But their loans are based on how much you’ve saved with them :slight_smile:

Yep…that’s why I suggested them :slight_smile:

1 Like

I agree with @smtucker and @jaquo - Short-term payday loans - and these are payday loans - are really a dangerous road to travel down under the best of circumstances – even with a salaried job. With holiday bookings as your collateral, it is nutty. It is very un-American, but I would do everything I can to save money and avoid these types of loans if at all possible.

2 Likes

Not really. Payday loan - APR 1272%. Payfully, APR 3% on the loan AZ took out. No its not the same level of risk at all. Note I’m not saying its risk free, but to compare a product that is cheaper than a short term loan or credit card spending (assuming you can’t get the 0% deal) is kinda like saying apples and pears are the same because they’re fruit.

Anyway this thread is starting to give me a headache so I’m ducking out. I can’t deal with the black and white opinions on this forum today.

3 Likes

What is the interest rate if the booking falls through and you have to repay the loan?

1 Like

Hey, don’t listen to me. The OP asked for folks opinion and I shared mine. Don’t do it unless you absolutely need to and even then don’t make a habit out of it. Hipsters in Brooklyn saw an opportunity to make money of off what is already a very slim margin of profit for many people. There have been tons of threads on this forum about what the hourly wage works out to for many and in many cases it is below minimum wage.

And @KKC started a brilliant thread a few months back on why one should NOT depend on Airbnb. If you can’t depend on it, for god sake’s don’t borrow against it.

I still say No, proceed with caution.

1 Like