A salary advance loan is a personal loan that is available to every salaried person in India. Allocating a part of your salary for emergency funds is crucial in financial planning. But, even after investing wisely, there may be situations where you need to borrow money. A salary advance loan can be an instant yet a safe option to avail in case of such exigencies. Let us now look into salary advance loan detailedly. 

What is a Salary Advance Loan?

A salary advance loan is a type of personal unsecured loan. This loan is accessible to every salaried person in the country. They are quick to access and easily available in the market. The repayment period for these loans is also very short.

These are some features of Salary Advance Loans

  • These loans can be borrowed in advance by lenders and with advancements in technology, they are easily available online.
  • The repayment period for these loans varies between twelve to fifteen months
  • These loans can be availed even if your credit score ranges from moderate to good.
  • These loans are charged interest that is computed monthly
  • The annual percentage rate for these loans is the highest in the country.
  • The amount that can be borrowed from lenders is up to three times an individual’s salary

Eligibility Criteria for Advance Salary Loan

The eligibility criteria to avail of advance salary loans is given below

  • The applicant should be an adult 
  • The applicant should have an active bank account
  • The bank account should be in India with an Indian Bank
  • For application, the minimum age requirement is 21 years
  • The applicant should submit proof that a monthly salary is drawn by the applicant from a company
  • These are general requirements, but actual requirements may differ from lender to lender

How Can a Salary Advance Loan be Used?

Even if you meticulously plan your finances, there are chances that an emergency may occur and you may be in need of urgent funds. During these times, the salary advance loans can be used

Rent payment or Deposit Payment

If you move to a new city and you find an apartment to rent there but you do not have enough funds to pay the deposit for booking, during such times an advance salary loan might help you to pay the rent as well as the deposit for the same.

Medical Expenses

In case of any medical emergencies, a salary advance loan can be availed from your employer. For any major procedures, a loan up to an amount of three times the salary can be availed from your employer.

Purchase of Gadgets

If you want to buy any gadgets that are very expensive or are not affordable with the savings that are done monthly, then a salary advance loan can be availed. This helps you to own a gadget without much disturbance in financial planning.

Paying Bills

In case of a period for which the utility or any other regular bill has outdone your budget, then the advance salary loan can be availed so as to adjust and not overburden the budget of one month.

Investments

Sometimes, investments can take a back seat if funds are not available. With the early salary loans, you can ensure that compulsory investment is made every month. This way, the financial budget is not disturbed.


What are the advantages and Disadvantages of Early salary Loans?

If we compare the pros and cons of early salary loans we can assess the benefit of it

 

Advantages

 

  • A quick loan process and hence funds are obtained quickly
  • Since it is a low salary loan, it can be availed even if the credit score is not very high
  • Short-term loans can be availed to cover the lack of any monetary resources for time being
  • The application is online and hence no paperwork is involved
  • Funds are provided immediately so that no burden is taken for a specific time
  • The loan amount taken can be three times of the salary

Disadvantages

 

  • Since interest is charged monthly, it is one of the costliest debt instruments
  • Since the EMI and interest are high, any missed payments may lead to high penalties 
  • Since the borrowing process is very easy, overborrowing can be a problem


Conclusion

As the name suggests, advance salary loan is a loan against salary and can be availed from your employer. After the digitization, employers have found it easier to give their employees an option of such schemes and made them simpler to obtain. This loan can be used in times of emergency. As a salaried employee your income remains fixed but your expenditures may vary, so an advance salary loan can be your go to option.

FAQS Salary Advance Loan and why should you avail of one?

1:Is it good to take a salary advance?

A salary advance loan is a better option than swiping a credit card. These loans can be availed really quickly and if used productively they do not hamper the financial discipline of the applicant.

2:Why should you choose advance salary loans and not personal loans?

Personal loans are available at a reasonable interest cost only if you have a good credit score and credit history. On the other hand, advance salary loans are available to applicants with moderate credit scores and no credit history in the market.