Personal loan vs Salary Advance Loan: Which one to Choose?

Salary Advance Loan

At first glance, personal loans and salary advance loans may be comparable. In reality, several payday lending companies offer their services as “personal loans with no credit check,” which might lead to misunderstandings among borrowers. -Salary Advance Loan

However, there are some essential distinctions between the two products. One should be aware of them before thinking about things like Personal Loan, Personal Loan Eligibility, Personal Loan Interest Rates, etc.

Debt consolidation is one of the most common purposes for personal loans. With a personal loan, one can pay off credit card debt and know precisely when you’ll be debt-free (as long as you stop carrying balances on your cards).

Salary Advance and Personal Loans

With the growth of new-age borrowing sources, the consumer finance industry provides clients with a diverse variety of alternatives across categories. Salary advances and Personal Loan Eligibility are the two new-age borrowing alternatives for retail consumers that provide credit to salaried professionals without requiring collateral.

Flexible Repayment

  • A salary advance provides you with the ‘extra’ cash you need to get through difficult circumstances. It also gives you more options than a Personal Loan. 
  • A personal loan’s payback duration can be as long as five years; given the uncertainties of life, this long-term financial commitment may not be ideal for some borrowers and can cause future issues. 
  • Non-payment can harm your credit score and may result in your loan application being rejected in the future. 
  • While personal loan repayment schedules are set in stone, using a Personal Loan EMI Calculator, you may create a more flexible payback timeline based on your repayment ability. A salary advance allows you to borrow money and pay it back in instalments. 
  • The payback period might range from a month to a year.
Must Know:  How to Save Money When You Don't Make Much of an Income

Easy Application, Quick Disbursal

  • The convenience and quickness with which the loan cash may be promptly sent to your bank account is the most crucial benefit of a salary advance.
  •  On the other hand, personal loans need more documentation and take longer. It might take 7-15 days for a bank to authorise a loan and transmit the funds. 
  • A salary advance functions as a cushion when you need money urgently during a financial crisis.

Credit Score

  • A high CIBIL (Credit Information Bureau Of India Limited) score is required for a personal loan. This is not a score that can be built overnight. 
  • If you have only recently started your professional employment, you may not obtain the necessary personal loan amount. 
  • You may receive a short-term loan up to Rs 2 lakh with a salary advance, even if your credit score is low.

While metro towns offer job prospects, they also put a strain on your finances. Living in a metro city may be expensive, whether for a new apartment or the everyday expenditures of food and transportation.

Despite careful planning and saving, we may not be able to get through a short-term cash problem. You can use the salary advance to help with a disaster, pay expenses, or buy an investment, and then pay it back with your next paycheck or EMIs. 

A salary advance can be used instead of a personal loan since it is generally less expensive to obtain a salary advance to prevent late fees, fines, and service disruption.

Salary advance can help you avoid needing pricey personal loans and meet ends by having no hidden fees and competitive interest rates that are only charged for the number of days you utilise the money.

Must Know:  4 Incredible Ways Your Business Benefits from Outsourced Payroll Services

Conclusion

Salary advances are short-term loans given to paid employees that can be used for any purpose. On the other hand, personal loan are given for a period of one to five years to pay higher costs. 

A salary advance is perfect for short on funds and requires immediate cash to cover unexpected bills before their next paycheck arrives. Personal loan interest rates are often higher than salary advance interest rates.

 

 

Leave a Reply