Advance Salary Loan

Advance Salary Loans are temporary loans offered for salaried professionals in India. Unlike personal loans, the interest rate for these loans is calculated on a monthly basis or even daily basis by some lenders. The interest rate and other loan terms are likely to vary from one lender to another. One of the notable advantages of these loans is that they are available even to individuals with a moderate credit score. Moreover, there are many lenders that disburse advance salary loans within a matter of hours, if not minutes. Due to this fast processing time and high-risk nature, these advance salary loans come with significantly high annual percentage rate (APR).

Though the repayment terms are highly favourable to the lenders, these loans could help an individual during a dire situation. It is advisable to opt for these loans only during emergency situations when there are no other options available.

Top Salary Advance Loans in India: Compare and Apply

There are many companies that offer these types of loans in India. While some companies restrict themselves to providing short-term advance salary loans, others provide flexible long-term loans based on the creditworthiness of the borrower. Almost all these loans are approved within a few hours through paperless verification. As noted earlier, the terms and conditions of these loans vary from one company to another. Let’s check out some of the popular advance salary loan providers in the country:

1. EarlySalary

EarlySalary is one of the most renowned firms that offers advance salary loans with 100% online paperwork approval. Customers can download the app to get instant salary advance for their emergency cash requirements.

Benefits:

• Special products for paying children’s school fees and shopping
• Hassle-free application process
• Advance salary loan disbursal within few hours of application
• Flexible repayment process

2. Loan Tap

This is a company that offers advance salary loans with flexible terms. It offers loans up to 2.5 times your monthly salary with minimal processing time.

Benefits:

• Easy online application process
• Flexible repayment tenure from 3 months to 12 months
• Loan disbursal within 24 to 36 hours of application

3. Cashkumar

This company offers short-term loans to both salaried professionals as well as self-employed individuals. Loan approval is instant, and disbursal is done within just 24 hours.

Benefits:

• Quick disbursal after application
• Flexible repayment tenure from 3 months to 12 months
• Minimal documentation process

4. Quick Credit

This is a company that offers advance salary loan disbursal within a few hours of application. The loan amount can be used for any of your emergency financial requirements.

Benefits:

• Money disbursal in just one hour
• 100% paperless verification
• Flexible repayment tenure up to 30 days

5. Flexsalary

Flexsalary is a financial service provider that offers personal loans digitally. Customers can get easy access to instant loans for various needs including emergency medical expenses, marriage, home renovation, etc.

Benefits:

• Minimal documentation
• Open ended loan tenure as per borrower’s choice
• Affordable interest rates

6. Credit Bazzar

The loan offered by Credit Bazzar is ideal for your short-term cash requirements. Here, loan approval is provided only after calculating the borrower’s ability to repay the loan amount.

Benefits:

• Flexible repayment tenure up to 90 days
• Quick loan disbursal through online application
• Minimal documentation process

7. Payme India

This is a short-term loan service provider that offers advance salary loans at an affordable interest rate. Customers can apply through the company website or through the mobile app to get the loan amount.

Benefits:

• Swift approval within a few hours
• Accurate assessment of customer profile
• Easy documentation and approval process

These are some of the popular advance salary loan lenders operating in the Indian market. As you can see, the interest rate and other terms vary a lot from one service provider to another. Most of these loans are approved and disbursed within just a few hours. Some lenders even promise loan disbursal within just a few minutes. In addition to advance salary loans, some lenders also provide other financial services like personal loans, loan against collateral, etc.

How to Apply for Advance Salary Loans

Most banks and lenders have a similar system when it comes to applying for an advance salary loan. The broad steps to follow are:

Step 1: Fill in the online application form or a hard copy of the application form available at the nearest lender’s branch office. This contains your personal information, professional information and details of income. It also contains information about your loan requirement and reason for the same.

Step 2: Wait for conditional approval. All you do here is wait for the application to make its way to the desk of the bank official who has to scrutinize it and approve it. Once approved, a communication will be sent to you from the lender saying your application has been approved and asking for a set of documents (as mentioned above).

Step 3: Know Your Customer (KYC) and document collection. Once you receive your approval, you must collect the required documents – identity proof, address proof, age proof, details of employment, proof of income and some specimen signatures. You can also send these across via e-mail, which makes the process a lot faster.

Step 4: Credit to your account. Once the documents have been verified by the lender, the amount requested will be credited to your regular salary / business account.

There are many lenders who approve the application and credit the amount in your bank account in matter of a few hours, once they establish your identity. It is recommended to anyone who’s considering advance salary loans to explore all other available options first. If none of the other options available (including asking family and friends, or even getting a second job) prove to be unfeasible, or work out more expensive, only then are borrowers advised to take advance salary loans. The interest rates are high, and so are the stakes.

Some banks waive off processing fees and other additional charges. It is important to choose the right combination of lender, approval time, interest rate, repayment schedule and loan amount in order to judiciously plan out your finances and make sure you are not making the wrong decision.

Eligibility Criteria for Advance Salary Loans

While the banks and lenders don’t put too much stock by your past credit history, they still require you to meet certain conditions and check certain boxes before they approve your loan.

Please note that the above income requirements are indicative. Different banks and lenders require different incomes in this regard.

• You must have an operating savings bank account.
• You must be a resident of India.
• You must have all the documents required.

Documents Required for Advance Salary Loans

Banks and lenders do not focus excessively on your credit score unless it is extremely poor. However, you will be required to furnish an original set of documents so that they can establish and verify the details you furnish in your application.

• Photographic identity proof– could be a voter’s ID card, passport, driver’s license, PAN card, etc.
• Passport and stamp sized photographs– keep around 5 with you, as the bank will require a few of them. And it’s the kind of thing that makes people run around at the last minute.
• Address proof– could be your telephone / internet bill, rental agreement, house deed, passport, driver’s license, ration card, certified letter from employer, etc.
• Signature proof– A few dozen specimen signatures, along with a document against which to compare them. Could be your passport, PAN card, Bank verification letter, etc.
• Age proof– could be your passport, driver’s license, PAN card, birth certificate, etc.
• Current employment– documents to verify that you really do work where you claim to work. Could be your appointment letter, Form 16, 1 year old salary slip, etc.
• Previous employment– if any, could be your appointment letter, Form 16, promotion letter, transfer or confirmation letters, etc.
• Financial statements– from the bank, to ensure you are able to pay back your loan. Could be salary slips for the last 3 months. For non-salaried businesspersons, ITR and complete audited financials are required.
• Bank statement– bank statement showing salary credited for the last 3 months.
• Employment proof– Employee ID card and/or business (visiting) card.

Features and Benefits of Advance Salary Loans

• Part prepayment facilities– which mean that you can prepay your outstanding amount, in part or in full – depending on your lender. Some banks even offer you the facility to pay off your entire outstanding loan amount after 180 days of funds being disbursed.
• Minimal or zero pre-closure charges- Loans can be pre-closed, by paying little or no penalties, depending on your bank.
• Online account access– from most banks and lenders enable you to keep a real time check on your finances, how much you owe, how much interest is compounding, and how much you will eventually pay in total.
• Insurance cover– some lenders give you complimentary personal accident cover and credit shield facilities, to sweeten the deal.
• Cover financial emergencies– any financial emergency you may have, which is pressing in terms of the time you have to clear it – can be sorted out with advance salary loans. The entire purpose of advance salary loans from the customer’s point of view is to be able to clear all financial liabilities and have a more flexible time period in which to pay back the loan taken.
• It’s an unsecured personal loan.

Limitations of Advance Salary Loans

Just as advance salary loans have a host of benefits, they also have many disadvantages that could hurt your financial standing in the long run.

• High interest rates– personal loans granted as advance salary loans carry among the highest interest rates of any loans in India. The ease they bring in terms of financial help is sometimes overshadowed by the high interest rates on EMIs, and the huge sum that you will eventually have to repay. Interest rates vary from 15% to 21%, a high range for any bank offering any kind of loan.
• Longer time period = greater total cost– The longer you take to pay off the loan, the more potential problems you may face. A longer time period allows for more hiccups in your general rate of income, even the slightest dip in which could affect your repayment schedule. Missing an EMI payment means the bank will levy heavy fines and penalties which will compound to amount to a huge monthly instalment. A longer repayment schedule also means a larger eventual total cost, despite smaller monthly payments.
• Debt transfer– The reason one would require an advance salary loan is usually an altogether unpleasant place to be in, financially. You may need it to repay a debt, or fulfil an emergency expenditure. Whatever the reason, the amount you will have to pay is just being transferred from who you actually had to pay, to the lender – and you will still have to pay it off, but now with a longer and more arduous process.
• Tough terms and conditions– Banks and lenders can introduce difficult terms and conditions on your loan, the repayment schedules, EMIs, interest rates, and pre-closure terms. In the hurry to secure the loan, you may be agreeing to terms that could heavily damage your financial standing. For example, the loan may have a clause that prohibits part payments, settlements, pre-closures, etc.
• Debt trap– If person who has never borrowed and finds himself against a wall, and the only way out is to take a loan – he may be trapped for the foreseeable future by the fact that he has to repay a larger amount than required. Missing payments would result in compounding penalties and interest, and the regular monthly payments may only scratch the surface of the capital amount that’s still due (after being used to clear penalties and interest charges). This would extend his repayment term, which would attract more fines.
• Over-borrowing– Most of those who apply for advance salary loans sometimes get overzealous in the amount that can be borrowed. They lose sight of the expenditure for which they require the loan, and decide to solve two or three finance-related problems with the same loan. This leads to requesting a larger round-figure as a loan amount (cost of expense A + expense B + expense C + round off), and getting stuck in a pit of debt.

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