What is a Salary Advance Loan – Eligibility and How to Apply
During a financial emergency, premature withdrawal of FDs may not suffice the financial requirements. A salary advance loan gives you the necessary funds to meet your financial needs before your next salary is due.
This article helps understand how a salary advance loan works, interest rates, eligibility, documents required and how to apply. Read on!
What is a Salary Advance Loan?
A salary advance loan is a type of personal loan that you can avail of for meeting the financial shortfall between your salary and your expenses. If your expenses exhaust your salary income and your next salary is not due anytime soon, you can avail of an instant salary advance loan in India for meeting the financial expenses which occur before the next salary is credited.
Features and Benefits of a Salary Advance Loan
Before applying for a salary advance loan, have a quick look at these features and benefits of the same.
Features
- Generally, the interest rate ranges between 1.5% to 3% per month
- The repayment tenure is usually between 3 months and 3 years
- You can avail a loan amount of anywhere between Rs.50,000 and Rs.2 lakh
- Loan approval can take anywhere between a few minutes and a few hours
- Disbursal takes place between 5 and 48 hours
- The lender determines the loan amount and tenure depending on the borrower’s Credit Score, salary, existing loan (if any) and stability of employment
Benefits
- Fast and easy source of finance
- Simple and paperless application procedure
- No collateral is required as this is an unsecured loan
- Minimal or no pre-closure charges are applicable
- Fast disbursal of loan amount with minimal or no waiting period
- Short loan tenure ensures faster repayment and fewer EMIs
Salary Advance Loan Details
| Loan Amount | Up to ₹20 Lakh |
| Interest Rate | 9.9% to 45% p.a |
| Foreclosure Fee | Nil |
| Tenure | Up to 72 months |
How to Apply for a Salary Advance Loan?
Now you can apply for a salary advance loan in an easier way by visiting the website or downloading the app of your loan provider. Here are the steps you need to follow to apply for a salary advance loan successfully:
- Get the App
Download the app of your loan provider. Nowadays, most financial institutions and loan providers have apps. If they do not have one, you can visit their official website.
- Fill in your details
Provide your basic details such as name, age, PIN code and marital status.
- Fill in your professional details
Add your profession specific details such as employment type, salary and PAN number.
- Choose your loan amount and EMI
You will have to choose your loan amount from the approved limit based on your details and eligibility criteria.
- Set your EMI
Check your EMI liability and set your EMI payable. You can use one of the EMI calculators available online to calculate how much you need to repay.
- Provide bank details
Fill in your bank details for automatic transactions. Provide bank name, IFSC code, and your full name. You can also enable the auto-debit option to make sure there’s no default in EMI payments.
- Get your approval
If all of your documents are found to be in proper order and authentic, your salary advance loan will be approved within minutes.
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Eligibility Criteria for Salary Advance Loan
The eligibility criteria to avail a salary advance loan are:
- Age: The minimum age required for loan application ranges from 18 to 25 years while the maximum age is usually 65 years. It can vary from one lender to another
- Occupation: You should have a salaried job or be a self-employed businessman or professional to avail the loan
- Income: You should have a steady source of income so that the loan can be easily repaid. There is a minimum income criterion that depends on the lender
- Credit Score: Your credit score should ideally be more than 650 so that the loan gets sanctioned without any hassles.
Calculate your Salary Advance Loan EMI
Loan Amount
Rate of Interest (P.a)
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Loan Tenure (Years)
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Monthly EMI
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Total Interest
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Documents Required for Advance Salary Loans
When making an application for an advance salary loan, the following documents are usually needed by lenders
- Recent and coloured photograph
- Identity proof – any one document from PAN Card, Aadhaar card, Voter’s ID Card, driving license, passport, etc.
- Age proof – any one document from PAN Card, Voter’s ID Card, Aadhaar Card, passport, driving license, etc.
- Income proof – salary slips or financial statements of your business
- Address proof – any one document from Aadhaar card, Voter’s ID card, driving license, passport, utility bills, etc.
- Bank statements for the last 3-6 months
However, in order to expedite the process, you can apply for a personal loan through the Navi App wherein these documents are not needed. You only need to provide your PAN and Aadhaar Card details along with a selfie. It is an easy and seamless process. Check out the features and benefits of applying for a personal loan on the Navi app below.
Why Do You Need a Salary Advance Loan?
There are many situations in which you definitely need to make a payment. Such occasions are not foreseeable and thus, you may need the help of an advance salary loan. So, here are some expenses that you can meet by utilising an advance salary loan:
1. Sudden Medical Emergency
You or your family members might suffer a sudden illness or injury for which you might need funds for treatments. Your salary might not prove sufficient to provide you with the desired funds and so you can avail an instant salary advance.
2. House Rent
Suppose you find a house to rent but have to pay a deposit amount. Instead of having to let it go, you can opt for an advance salary loan to get the house on rent.
3. Utility Bills
You may have to pay your utility bills to avoid disconnections and other problems. If you are approaching the due date to pay bills, an advance salary can help you out.
4. Children’s School Expenses
You may have planned to pay your children’s school fees but unexpected expenses may cause financial problems. Advance salary loans can cover your children’s school fees.
5. Car Repairs
If your car stops working without any warning, you need to get it repaired immediately or you’ll be unable to go to the office. This is when you can use the advance salary loan.
6. Sudden Gifting Needs
If your loved ones are celebrating an important milestone in their life you might need funds to buy them a gift. Moreover, anniversaries and birthdays of your spouse and kids might also result in a surprise party or trip. These gifts, parties and trips incur considerable expenses and you can avail a salary advance to meet such expenses.
7. Other Unforeseen Expenses
There might be other unforeseen expenses which might arise anytime and if your salary just helps you meet the budgeted expenses, you need additional funds for emergencies. A salary advance loan proves to be helpful in providing funds for emergencies and you can make an application for an advance salary loan in such circumstances.
Interest Rates and Tenure of Advance Salary Loans
The monthly interest rates for advance salary loans can range from 1% to 6% and the average APR is between 25-50%. We can see that even if the displayed interest rate may be in the single digits, the APR (Annual Interest Rate) can be quite high.
The repayment period for these loans is shorter than in other loan categories. Depending on the lender, the tenure of these loans ranges from a week to 3 years. Hence, these loans are useful if you wish to borrow a small amount and intend to repay it immediately.
Final Word
A salary advance loan can help reduce a short-term cash crunch. You can opt for it only if you are in a difficult financial situation. Choose your EMI amounts and tenure wisely. Also, check with various lenders to compare the interest rates. Remember, your credit score must also be over 650 so that you can get a salary advance loan at a lower interest rate. Given the high-interest rates of a salary advance loan, it is best to repay the loan quickly.
If you want an instant cash loan in a 100% paperless manner with flexible EMI options, download the Navi App and apply now!
FAQ’s
Ans: The repayment period differs from lender to lender. Usually, a period ranging from 12 months to 60 months is allowed to pay off the loan that you avail. However, Navi offers you a repayment tenure of up to 36 months to pay off the personal loan that you avail.
Ans: If you choose a reputed personal loan app, such as Navi, you can safely apply for the loan. There would be no threat of online fraud or theft and you can get the loans instantly.
Ans: Navi requires only your Aadhaar card and PAN Card to sanction the personal loan that you can use as a salary advance loan.
Ans: Yes, most lenders allow you to fully or partly repay your salary advance loan before the due date. Some lenders may allow you to foreclose the loan within just 180 days of the loan disbursement. The penalties for prepayment and foreclosure will vary from one lender to another.
Ans: Yes, if you fail to pay the EMIs on time, a late penalty will be applicable. The amount charged as a late fee will differ depending on the lender.
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