7 December 2021
Highlight Section: All you need to know about Salary Advance Loans: Eligibility, Documentation, processing, and why you should get one!
Financial planning should be done prudently. It is necessary to set aside some contingency funds for unforeseen situations. In several households, nearly 20% of the monthly salary is saved for this very purpose. Nevertheless, regardless of your careful fiscal planning, unexpected external situations could still lead to a financial crisis. Employees drawing a monthly salary get trapped with financial burden if some unanticipated scenario emerges in the middle of the month. Waiting for your salary to be credited to remedy the situation may not be an option. Add to that is the fact that a regular salaried employee has to deal with inflation and the rising cost of living rates daily. To tide this financial gap, people usually opt to borrow from family and friends or turn to informal lenders for monetary support. These options are unreliable and could lead to long-term complications. The practical option, in such scenarios, would be to apply for a short-term loan on salary, also known as a salary advance loan.
A salary advance loan is a form of personal loan that salaried employees in India can avail. It serves as an unsecured loan that can be borrowed for a short period and paid back quickly. Previously, the advance salary was something that employers would disburse to their employees in their time of need. However, with advances in technology and new policy introduction in the financial sector, you can now borrow salary advance loans from online lenders. Sometimes you can borrow up to three times your monthly salary. These loans usually have to be repaid within twelve to fifteen months. This means that it can be a form of a temporary loan ahead of your salary to meet your financial requirements. One primary advantage is that this is a low salary loan and can be availed even with a moderate credit record. For these types of loans, the interest rates tend to be calculated monthly. Hence, salary advance loans have one of the highest annual percentage rates (APR) among loan categories in India.
● You must be an adult and need to have an active bank account within India.
● At the time of loan on salary application, you must have completed at least 21 years of age.
● You must be employed and draw a certain amount of net monthly salary.
While most lenders broadly expect these conditions to be fulfilled, exact requirements might differ between them.
Even with the most meticulous financial planning, sometimes we can fall short of our fiscal requirements. Availability of a low-salary loan such as a salary advance loan can help meet your critical monetary commitments effectively. Some circumstances where a salary advance loan might come in handy are mentioned below.
● Payment of house rent or deposit – If you find an apartment that you wish to rent but cannot wait to book it until your salary is credited, a salary advance loan would be your go-to solution in such a case.
● Vehicle repairs – Breakdowns occur unexpectedly, and not having the necessary funds at the time of payment would become a hindrance for your travel arrangements.
● Utility and other bills – Payment of bills is a regular cycle. However, if you incur a high amount on your bill during a particular month, you might face a cash crunch; a salary advance loan can help ease your burden.
● Medical expenses – Despite having medical insurance, several outpatient procedures or routine check-ups are not covered. Sometimes medical expenses might exceed your regular insurance cover. All these can be managed by applying for a salary advance loan.
● School expenses for children – Schools plan trips or other activities that require you to make payments immediately. When you don’t have access to readily available funds, you can depend on salary advance loans to save the day.
● Purchase of expensive gadgets – Special offers come up unexpectedly sometimes on devices or goods you might need. In the absence of necessary funds, you can resort to borrowing a salary advance loan to ensure you don’t miss out on a good deal.
Let us do a quick overview and compare the pros and cons of borrowing and using a salary advance loan.
|A quick source of money, as funds get disbursed within hours of the loan application.||Interest on these loans is often charged monthly. Hence the interest levied on salary advance loans is amongst the highest for any loan category within the country.|
|A low salary loan like a salary advance loan can be availed despite having a relatively lower credit score than credit record requirements for other types of loans.||A Higher EMI / repayment amount needs to be paid due to the higher interest rate. Delayed payments or missed payments would also incur late fees and penalties. Hence, the loan account needs to be monitored efficiently. Otherwise, it could lead you into unnecessary debt.|
|Short-term loans can be availed to cover your lack of monetary resources until you get your salary.||Due to the ease of borrowing, borrowers might get trapped in the cycle of over-borrowing.|
|Paperless applications, online monitoring facilities, etc. help keep track of your borrowed principal, interest paid, the amount left to be paid, monthly EMI details, etc.|
|Provides monetary backup during emergencies so that you can handle your financial obligations without having to delay payments while waiting for your salary.|
|You can avail yourself of funds in the range of 2.5 to 3 times the value of your net monthly income.|
Depending on your lender, you can occasionally also get special offers such as:
● Facility to pay back in part payments
● Low or zero charges for loan pre-closure
While you may apply for salary advance loans during times of emergency, before applying for one, do check all the terms and conditions. All lenders may not provide you with the benefits you seek, so explore the available offers in detail before borrowing.
As a salaried employee, your monthly income stays fixed, but your expenditures are variable. Therefore, in times of monetary emergency, you may not always find yourself adequately equipped with emergency loans. Availing a short-term loan on salary during such situations can help you avert a financial crisis. Salary advance loans can thus help you to handle your financial liabilities quickly and efficiently. So, what are you waiting for? Download the EarlySalary app or visit the EarlySalary website and apply for an instant Salary Advance loan today!
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