With the rise of new age borrowing sources, the consumer finance space is delivering a wide range of options across segments to its customers. Salary advances and personal loans are some new age borrowing options for retail consumers that offer credit without collateral to salaried professionals. Let’s take a closer look at both:
Salary Advance and Personal Loan
A salary advance is a short-term loan extended to salaried professionals and can be used for any purpose. Personal loans, on the other hand, are extended to cover larger expenses over a period ranging from 1 year to 5 years. A salary advance is ideal for cash-strapped individuals who want quick loans to fund sudden expenses until their salary is credited. Interest rates charged on personal loans are generally higher than that on a salary advance.
A salary advance has the following advantages over a personal loan.
- Flexible Repayment
A salary advance, for example from EarlySalary, gives you that ‘extra’ money to sail through tough times. A salary advance also offers more flexibility than personal loans. The repayment tenure of a personal loan can put you in debt for as long as 5 years; given the uncertainty of life, this long term financial commitment may not be suitable for some borrowers and can create problems in the future. Non-repayment can affect your credit score and may also lead to rejection of your future loan application. While the repayment schedules are rigid for personal loans, with EarlySalary you can choose a favourable repayment schedule as per your repayment capacity using our loan calculator. A salary advance lets you borrow and repay in flexible EMIs. The repayment tenure varies from one month to one year. EarlySalary also allows you to repay the entire amount in one go without any foreclosure.
- Easy Application, Quick Disbursal
The most significant advantage of salary advance is the ease and quick speed with which the loan amount can be directly transferred to your bank account. All you need to do is download the EarlySalary app, share the requisite details and wait for 8 to 24 hours for approval and money transfer. The entire process is handled online and needs no paperwork. Personal loans, on the other hand, require more paperwork and are also time-consuming. Banks may take 7-15 working days to approve a loan and transfer the amount. Salary advance acts as a cushion during a financial crisis when money is required urgently.
- Credit Score
An essential requirement for a personal loan is a high CIBIL (Credit Information Bureau Of India Limited) score. This score cannot be built overnight. If you have recently begun your professional career then you may not be able to borrow the required amount of personal loan. With a salary advance, you can get a short-term loan up to Rs 2 lakh even at a lower score.
While metro cities provide career opportunities, they also hit your budget hard. Whether it’s a new apartment or the routine food and transportation costs, living in a metro city can be financially challenging. We may not be able to tide over short-term urgent money crunch despite conscious budgeting and savings. This is where a salary advance from EarlySalary can help. You can use this salary advance for assistance in a calamity, to pay bills or to make an investment purchase and then pay off with your next paycheck or EMIs. You can use a salary advance instead of a personal loan because oftentimes, it is cheaper to take a salary advance to avoid late fees, penalties and service disruption.
With no hidden charges and competitive interest rates that are charged only for the number of days you use the money, EarlySalary’s salary advance can help you prevent needing expensive personal loans and meet ends.