Financial emergencies can arise at any time. And, during difficult times, bank account savings and premature withdrawal of FDs may not suffice the financial requirements. Thankfully, a salary advance loan can come to your rescue. This loan gives you the necessary funds to meet your financial needs before your next salary is due.
Take a look at the details of the advance salary loan, interest rates, uses, eligibility and how to apply for a salary advance salary loan online. Read on!
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.
The interest rates for advance salary loans are one of the highest in any category. Unlike other loans, its interest rate is displayed on a per monthly basis or daily basis (for a few lenders). So, even if the displayed interest rate may be in single digits, the APR (Annual Interest Rate) can be quite high.
The monthly interest rates for advance salary loans range from 1% to 6% and the average APR is between 25-50%. 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, with most offering tenures below a year. The combination of high-interest rates and short tenures make these loans very costly. Salary advance loans are useful when you borrow a small amount and intend to repay it immediately.
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:
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.
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.
Also read: How to Apply for Home Loans in India?
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.
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.
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.
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.
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.
The following table shows the key differences between advance salary loans and personal loans:
|Parameters||Advance Salary Loans||Personal Loans|
|Loans offered by||Fewer lenders||Most of the lenders|
|Accessibility||Salaried individuals only||Both salaried and self-employed individuals|
|Usage||Useful for a temporary cash crunch||Can be used for various purposes|
|Rate of interest||One of the highest, usually between 25% to 50% per annum||Higher than only secured loans|
|Loan amount||Small (usually up to 3 times the monthly salary)||High loan amount|
|Tenure||Usually not more than 12-15 months||Usually ranges from 12-60 months|
|CIBIL score||Moderate CIBIL score||750+|
|Age||The minimum age for loan application ranges from 18 to 25 years while the maximum age is, usually, 65 years|
|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 be more than 650 so that the loan can be sanctioned|
When making an application for an advance salary loan, the following documents are usually needed by lenders
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 Aadhar 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.
Navi is one of the best personal loan apps which help you avail of a loan instantly, within minutes. Here are the features and benefits of Navi’s personal loan app and the loan it offers:
As mentioned earlier, Navi offers the easiest way to apply for a personal loan which can act as a salary advance loan. The steps for applying for a personal loan through Navi are as follows –
The following are some of the limitations of salary advance loans In India:
Here are some of the important things you may want to consider before taking a salary advance loan.
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.
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.
Before you go…