Personal Loan

Benefits of Personal Loans over Salary Advances

3 min read

Mar 20, 2023

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There could be situations when you may fall short of cash and payday is still a few days away. In these situations, you may choose to swipe your credit card, take a salary advance or go for a Personal Loan. The question is which of these is a better option. In this article, we compare them and discuss why a Personal Loan may be more suitable than a salary advance loan.

Salary Advance Loan

A salary advance loan is similar to a Personal Loan, i.e. it is an unsecured loan pegged against your salary. You can get a loan of up to 2.5 times your salary and pay it back in a short tenure of 3 to 12 months. If you are at least a 21-year-old Indian citizen with a minimum salary of ₹40,000, then you can get a salary advance loan of ₹25,000 to ₹1,00,000. There is a fixed processing fee of ₹2,500 to ₹5,000 + GST, based on the amount of the loan.

The interest charged is around 2.5% per month. You can prepay the loan after 6 months without any charges. This is convenient if you require a small amount of money for a short period.

Also Read: [Choose a personal loan interest rate that fits your pocket]

Personal Loan

A personal loan is an unsecured loan that can be utilised for a short-term financial need. It can be availed for planning a vacation, renovating your home or any other financial need. At Axis Bank, you can get a Personal Loan ranging from ₹50,000 to ₹40,00,000 at interest rate less than 1% per month. The processing fee of the loan is up to 2% + GST. The maximum tenure of a personal loan is 60 months.

For availing of a Personal Loan, you should be a resident of India having a minimum age of 21 years. You should have a valid set of documents like ID proof, income proof, PAN card and address proof. You can plan your repayment by using Axis Bank personal loan EMI calculator.

Benefits of Personal Loan over Salary Advance Loan

1. Higher loan amount: You can avail of a higher loan amount with a Personal Loan, while salary advance loans are limited to smaller amounts.

2. Flexible tenure: In a Personal loan, you can get a higher tenure of up to 60 months which makes it easy to repay, while salary advance loans are limited to a tenure of 12 months.

3. Lower rate of interest: The personal loan interest rates are lower than on salary advance loans, thus you will have to shell out lesser interest. Salary advance loans charge a high rate of interest.

4. More versatile: Personal Loans can be used for multiple purposes, while salary advance loans have a limited scope as the amount is low.

5. EMI schedule flexibility: With a Personal Loan, you can plan your repayment more effectively by using a Personal Loan EMI calculator based on your repayment capacity and the available tenure. This is not the case with salary advance loans.

6. Credit score: If you take a Personal Loan and repay it on time, it will have a positive impact on your credit score. On the other hand, paying off a salary advance loan does not impact your credit score much.

Verdict

The aforementioned factors show that availing of a Personal Loan makes more sense than a salary advance loan, owing to it being more universal. 24x7 Personal Loan provide a larger choice of purposes, amounts and tenures.

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.