Uber’s pilot program offers interest-free advance to drivers
App-based car service Uber Inc. has announced the launch of a new pilot program that provides drivers in Michigan and California with cash advances of up to $1,000 when needed.
Uber launched the pilot program, called Advance Pay, in partnership with financial service provider Clearbanc. The company's drivers will be able to receive the amount without any interest.
Announcing the new program, the company's regional general manager Rachel Holt cited a survey by the U.S. Federal Reserve that revealed that nearly half of Americans struggle to handle an unexpected bill of $400. Around a third were found saying that they unexpected bills forced them to borrow money at high rates of interest.
Specific qualifications for being eligible for the interest-free loan were not revealed by Uber, but the company declared that drivers would receive some of the amount up front and the remaining after they have taken their first tour as a driver.
The drivers will have up to 15 weeks to repay the advance. They can repay the amount either directly to Clearbanc or through their Uber weekly earnings. All automatic payments will be capped so that drivers will not have more than 50 per cent of their earnings deducted involuntarily.
Rival on-demand car service Lyft recently introduced its version of instant pay for driver, powered by Stripe. As the competition between the two companies is getting tougher, both companies are trying all possible ways to entice and retain drivers.
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