For all the salary workers, their paycheck is the most important resource of earning. It helps us fulfill our daily needs and provides us and our family financial security. However, Salary does is fixed and we can not earn more than the definite amount.
There are times when need extra money. In such times, there is an option to go for an Advance salary loan. It is a type of loan that allows the borrower to take a loan for a short span.
Salary Advance Loan
Salary Advance loan means if a person takes a loan against his salary to repay it later. One can get 3 times more money than the salary in case of an advance salary loan. The loan period can be different from 1 to one and a half years.
Salary Advance loans can help people during emergency financial needs or when they need additional money for a short period.The process of getting a Salary advance is a lot easier than personal loans. You just need a decent credit score to get a Salary advance loan. The documentation is not much when it comes to Salary advance loans.
Salary Advance Loan: Pros and Cons
We have mentioned the positive side and negative side of the Salary advance loan ahead-
Pros
Fast and Easy source of Money: one can get a loan against one’s salary within a few hours. the process is also made easy and paperless. This loan service can help people facing a financial emergency.
Collateral Free: Advanced Salary loan is categorized under the unsecured loan. So, it does need you to sign any collateral with the lender.
Short Tenure: One can pay the money they have borrowed within a year. It can be helpful to those people who need a small amount for a short period. You can repay your loan when your salary comes.
CIBIL Score: You do not need a high CIBIL score to get an advanced salary loan. You can get a loan against your salary even with a low CIBIL score.
Cons
High-Interest Rates: Before taking a loan against your salary, you must know that it has high-interest rates. While the borrower may feel at ease by looking at the single-digit interest rate, the calculation is done every month. That can extend your APR to go up to 25-50%.
It means that even if you take a loan, you must pay higher EMIs. If you want to calculate the interest rates and their effect on your pocket, you can take the help of online loan EMI calculators which are free to use.
Debt Trap: You can get trapped in the world of debt due to the high EMIs. If you do not plan your loan properly that it can result in financial strain and a debt trap.
Final Words
A loan of any kind is not a good option, to begin with. However, during financial emergencies, Salary advanced loans can help a person get money. so, it is advisable to take a salary advanced loan only in dire situations.if you are not good at managing your money, it can become more than just a loan and affect your budget significantly.
In case you want a loan with low EMI, you also have the option of going for a personal loan. So, make any choice with a plan. Before taking a Salary advance loan, do some research on the low-interest rates. Lastly, manage your expenses well so it does not result in a financial burden.
