The salary advance loan is getting highly popular among salaried professionals due to the flexibility offered and ease at which one can access the loan and meet the short-term financial requirements.
However, if not planned and managed properly, a salary loan has many disadvantages that could hurt your financial stability and stand in the long run.
For instance, the higher interest rates, shorter repayment schedule, and tough terms & conditions can easily put you in a debt cycle.
Therefore, it is a loan type that you cannot depend on too often and should be availed only when no other credit lines are available to you or under special circumstances.
Compared to a salary loan, a personal loan can be used for varied purposes, both short-term and long-term, like meeting financial emergencies, debt consolidation, financing higher studies and weddings, etc. There is no end-usage restriction on the use of loan amounts.
Further, the loans are relatively easy to apply and are approved based on the creditworthiness of the borrower.
Must Read: 5 Reasons Why You Should Get a Personal Loan
The eligibility criteria are easy to comply with and are largely based on employment status and creditworthiness. For instance, the eligibility criteria for a personal loan from Fullerton India include:
Compared to a salary loan, a personal loan has similar eligibility criteria and one advantage is, self-employed and entrepreneurs can also avail themselves of a personal loan.
It is a known fact that a longer tenure means a smaller EMI, and better flexibility for the borrower to be able to manage his/her monthly budget. In a salary advance loan, as the loan tenure is shorter, you don’t have much flexibility to choose the repayment tenure or quantum of repayments installments since the tenure cannot exceed 12-15 months.
Whereas, in a personal loan, using a personal loan EMI calculator, you can plan your EMIs while applying for the loan so that it easily fits within your monthly budget. You can choose an EMI amount that best suits you, as you have the freedom to choose a tenure upto 60 months.
By adjusting the loan tenure in an EMI calculator, you can find the best tenure that is suited according to the cash flows and other financial obligations, thereby reducing the financial strain and risk of default.
The tool also prevents you from over-borrowing and maintaining financial discipline.
Although a salary advance loan is a popular concept in western countries, in India, only a few lenders are operating in the market that offers the salary loan.
Whereas, personal loans are offered by almost all lenders in India and facilitate the online application process for quicker approval and disbursal.
Also, compared to salary loans, the borrower gets favorable terms on the loan and is entirely a transparent process, with pre-determined processing fees and other charges.
It’s important to maintain a credit discipline and a personal loan helps to do so. And, timely repayments also improve your credit score, which can help you in the long run. Whereas, in salary advance loans, the loans are disbursed after verifying your credit score, but don’t affect your credit score. Even if you make timely repayments.
Therefore, apply for an instant personal loan, and enjoy the host of benefits that it brings with itself.
*Terms and Conditions apply. Loans are disbursed at the discretion of Fullerton India.