An advance salary loan is a personal loan, available to a salaried person with a stable income. Today many financial institutes offer advanced salary loans for short durations. The interest rate, eligibility and loan terms differ from lender to lender.
Until recently, businesses would give their employees an advance salary when they needed it. However, thanks to technological advancements and the implementation of new financial sector policies, you can now obtain salary advance loans from online lenders. This indicates that today, advanced salary loans are a form of short-term loan availed to meet the financial obligations that do not fit into your salary.
What Is Advance Salary Loan?
Salaried people can face situations where they may have to borrow money. Some people decide to borrow money from family or friends, while others opt for a long-term loan from a financial situation. Unfortunately, all of these options may end up being extremely inconvenient. In such situations, a salary advance loan may be the best solution.
An advance salary loan is a short-term loan given to those who are employed based on their salary and employment. Many lenders offer 2.5 times the net salary as a salary loan. The typical repayment period for these loans is three to fifteen months. Most people use advance salary loans to cover emergency medical expenses, costly vehicle repairs, to pay house rent or rental deposit, childcare costs, or school fees for their children.
An advance salary loan might be helpful in times of need when a person cannot wait to get their next paycheck and does not want to take out a personal loan. The borrower is required to pay this back either in monthly instalments or with his or her next salary.
Benefits of Advance Salary Loan
With inflation and rising costs, it is becoming increasingly difficult for average-salaried people to meet their basic necessities. To tide over financial emergencies, the practical option would be to apply for a short-term loan on salary, also known as an advance salary loan. The following are the benefits of an advance salary loan.
Easy repayment
Salary advances feature a simple repayment plan. It is usually directly deducted from the borrower’s salary. If not, the repayment plans are set up to coincide with paydays to prevent any cash shortages during the repayment time. You can choose to repay as per your affordability and capability.
Quick disbursals
Salary advances do not take much time or cumbersome paperwork. There are numerous apps in the market that offers you quick disbursals on salary loans. You can also apply for a salary loan with the financial institution where you hold your salary account.
Low-interest rates
Salary advances have very low-interest rates. This can prevent aggravating any existing financial hardship you may be experiencing. Additionally, unlike financial institutions where interest is charged on the accumulated amount as soon as it is released, salary advances only charge interest on the money that is drawn and used.
Convenient and flexible
A salary advance is far more convenient in terms of its processes and flexible in terms of both amount and interest rates. The salary advance is typically taken out of subsequent payslips, which makes repayment simpler. You don’t need to put money aside separately to pay back the advance.
Unexpected emergencies
Not everything can be predicted. A sudden illness or hospitalisation might cause our costs to spiral out of control. A salary advance may appear like a much better choice in these situations compared to withdrawing funds from fixed deposits or taking out a high-interest emergency loan.
This helps avoid huge expenditure cuts in the future. However, the funds don’t necessarily have to be used always for dire situations. A salary advance assists you in paying off a sizable and unexpected sum of money, such as medical expenses, credit card balances, or travel expenses.
Conclusion
Taking salary loans is more convenient in terms of procedures, and flexible with the amount and interest rates as compared to a personal loan. Furthermore, salary advances are advantageous to both the employer and the employee since they prevent employees from experiencing financial difficulties right away after starting work. The salary advance applications process is more seamless and hassle-free with instant approval and quick money transfer.
