What is an advance salary loan?
It is a loan that can be availed for a duration of anywhere between 10 days to 12 months at a higher interest rate than other loans. Compared to regular personal loans, there is greater flexibility in repayment options. These loans are for salaried individuals having a certain minimum monthly salary (Starts at Rs. 20,000 p.m.). These are not provided by traditional banks, but by non-bank finance companies. This is a relatively new type of loan in India.
What is the processing time and loan amount that can be availed?
There are no fixed amounts. Most of the companies offer loans between Rs. 5,000 and Rs. 1,00,000. The loan amount is linked to the monthly salary.
Loans can be approved even in a few hours if all the paperwork is in order. Most companies have an app to facilitate loan application and paperwork. Post this, the signed documents have to be handed over to a company representative. Getting the amount credited in the bank could take up to 2-3 working days post-approval.
Eligibility criteria & Charges
The eligibility criteria for Advance Salary loans is lower than most other loans. Those with a weak credit (CIBIL) score, who are not able to get a loan from a bank, could get an advance salary loan. The basic criteria being the individual has a regular monthly salary of a certain amount.
Interest charges and processing fees differ from each loan provider.
Let’s take a look at some of the options available.
Loan Amount: Rs. 8,000 to Rs. 1,00,000
Loan Tenure: 7 to 43 days
Processing Fees: Rs. 100 to Rs. 300 (Based on Loan Amount)
Late Payment Fees: 3% per month of
Interest Rate: 2.5% per month. (Can be lower based on application)
Eligibility: Monthly Salary of Rs. 20,000
Documents required: PAN Card, Aadhaar/Passport/Driver’s License, Bank Statement
Loan Amount: Rs. 25,000 to Rs. 1,00,000
Loan Tenure: 3-12 months
Processing Fees: Rs. 2,500 to Rs. 5,000 (Based on Loan Amount)
Eligibility: Monthly Salary of Rs. 40,000
Interest Rate: 5% of
Loan Amount: Rs. 5,000 to Rs. 50,000
Loan Tenure: 10 to 30 days
Interest Rate: 0.1% to 0.2% per day
Documents Required: PAN Card, Aadhaar, Salary Slip
Should You Take an Advance Salary Loan?
While Advance Salary loans are disbursed very quickly and offer convenience that other loans do not, the interest rates and processing charges are high. It’s a good idea to use this option only in times of medical and other emergencies.