4 Questions You Need to Ask Before Availing a Salary Advance

 Apart from being a great source of short-term of emergency funds for employees, a salary advance also does a lot for the employer offering the facility in the first place. Offering a salary advance as a form of financial assistance works wonders for employee morale and productivity. It’s not uncommon for you to need financial help from time to time. In such a situation, if your company offers you the facility of borrowing salary advance loans, it’s perfectly alright for you to approach them for one. Before you do so, there are a few things you need to be sure of. We’ve compiled a list of four questions you need to ask your employer before availing a salary advance. Read on.  

1. “Am I eligible?”

If your company provides you with the option of borrowing a salary advance as and when you need it, there are chances that they already have certain eligibility criteria in place. It would be wrong to assume that just about everyone in your company can ask for a salary advance. As an employee, you may be required to have worked for a minimum time period to be eligible. Either that, or maybe only employees of a certain pay grade and above qualify for an advance. This is why it’s a good idea to first check up on the eligibility criteria before you apply for an advance salary loan.



2. “What’s my repayment tenure going to be like?”

Most companies, if at all they have a salary advance program in place, deduct the loan amount out of the employee’s monthly salary in regular instalments until it is fully paid off. If you are planning in taking out a salary advance loan, you need to know what your tenure options are, so that you get a clear idea of when the loan will be fully paid off.

3. “Will I be charged any interest?”

 This is an important question, because whether on not you will be charged interest depends upon the salary advance policy in place. If your company treats it as an advance on your salary, chances are that it will be interest-free. If they treat it like a proper loan, you may be charged interest, depending on the amount that you’re borrowing. Interest or no interest, this is something you need to get full clarity on, because it makes your loan that much more expensive (or inexpensive). 

4.  “Can I prepay my loan if I want to?”

The answer to this question will help you if you find yourself in a position to pay off your salary advance earlier than you imagined. Find out if you can do that, because in case you’re being charged interest, your company will lose out on that interest income if you prepay your loan before the due date.

Wrap Up

The above-mentioned points cover some of the basic things you need to know in case you’re thinking of applying for a salary advance loan. Asking these questions will help you decide if you have the ability to borrow one and repay it as required.


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