A type of loan intended specifically for salaried employees is an advance salary loan, also known as a salary advance loan. This kind of loan, as the name suggests, lets workers borrow money against their future salary, giving them access to cash when they need it most.
What differentiates it from a personal loan?
One of the main differences between a personal loan and an advance salary loan is how the money can be used. Most of the time, personal loans are unsecured loans that can be used for a variety of things, like paying for home improvements, paying off debt, or going on vacation. However, advance salary loans are typically only used to meet immediate financial needs, such as unexpected expenses or a short-term cash flow constraint.
Another significant difference exists between the two kinds of loan applications. The credit history is typically checked more thoroughly when applying for a personal loan, and additional documentation, such as proof of employment and income, may be required. In contrast, advance salary loans are typically approved based on the borrower’s salary and job status, and the application process is typically simpler.
Advantages of a salary advance loan:
Advance salary loans offer a number of advantages to salaried employees. One of the main benefits is the ease and convenience with which money can be accessed. Due to the borrower’s salary, the approval process for these loans is typically quicker than for other types of loans. In addition, the loan can be disbursed quickly—typically within 24 to 48 hours—giving borrowers immediate access to the funds they require.
Another advantage of advance salary loans is their adaptability. For the majority of borrowers, the typical loan repayment term is between 12 and 24 months. This makes it easier for borrowers to keep track of their loan payments and ensures that they will be able to repay the loan in full and on time.
Conditions for obtaining an advance salary loan:
To typically be eligible for an advance salary loan, you must be salaried, have a steady income, and have good credit. In addition, you must have been employed by the same company for a predetermined amount of time, typically six to twelve months. a monthly salary of at least Rs. Banks and NBFCs also require between 20,000 and 25,000.
