3 Things You Need to Know About a Cash Advance Loan

When it comes to borrowing loans today, the salaried professional has three broad options in front of him – borrowing against a credit card, taking a loan from a traditional bank, or availing a personal loan from among a host of lenders, including NBFCs and FinTech companies. Each of these options come with their own disadvantages, though. Traditional banks are known for long waiting times – it can take up to two weeks just to get your loan application approved, leaving aside the long queues and extensive documentation involved. Personal loans do come with a lot of benefits, sure, but if you’re looking for smaller amounts, chances are you won’t find anything below ₹50,000. The repayment tenures that personal loans come with are also usually from six months to a year. Let’s not even talk about how costly credit cards are – interest rates start from 15% and can go up to as high as 30%. 

So, if you have a sudden expense to meet, but you only want a small amount, let’s say, around ₹8,000 and want to pay it off within a month, what do you do? You look for a cash advance, that’s what! Here are three things you need to know about them before you decide to take one out:

1. It is an Advance. 

A cash advance is when you approach your employer and ask him or her for a portion of your next month’s salary beforehand, so that you can meet an urgent expense without worrying about a personal loan, credit card, and the like. In such a scenario, it is important to understand that this is still an advance on your salary for next month, and not “extra” money of any kind. You will either have to pay it off via a deduction in your next month’s salary (depending on your repayment tenure) or make a one-off payment towards it separately. This is still a liability which you need to pay off.

2. You May Be Charged Interest

Depending on how your company treats cash advances, you may or may not be charged interest on the same. Some companies treat it as a part of their Employee Benefits program, in which case it is usually interest-free. But even if you are being charged interest, it is bound to be at a rate much lesser than the prevailing market rate for personal loans. Couple this with the fact that such cash loans have fast approval, you still have an option of getting emergency funds from – your own employer!

3. Documentation is Still Involved

If you thought you were off the hook with regard to documentation for a cash advance, think again. This is not to say that there’s extensive paperwork waiting for you (heck, no), but there is an employee application form that will have to file all the same. Once that’s done, there might be an agreement of sorts that you may have to sign, stating the amount being loaned to you, interest involved (if any), repayment period, and and any other terms and conditions. This is still a loan, so it makes sense that there are documents to put it in writing.

In Conclusion

The above three points highlight why it’s a great option to take out a cash advance when you get a chance – just bear in mind that not all companies offer their employees this option.   

Popular posts from this blog

All You Need to Know About Unsecured Business Loans

Business loans are sanctioned to existing business owners or budding entrepreneurs looking to start their own business. The business loan amount helps them get their idea off the ground. Existing business owners can use the funds to take care business expenses. The loan amount includes the principal amount which is paid with interest in monthly installments. How affordable/reliable is a business loan? Can you, as a business owner honour your installments on time? Other than loans from banks and NBFCs, you can get personal loans for business from FinTech lenders as well. In this article, we discuss business loans in detail. Business loans are broadly categorized into two types - secured business loans and unsecured business loans. What is an Unsecured Business Loan? The main difference between secured and unsecured business loans is that the latter requires the you to offer collateral while an unsecured loan does not require you to pledge any security. For a lender, secured business lo...
Read more

3 Advantages of Consolidating Debt Using a Personal Loan

Whenever you’re faced with a financial emergency, taking out an instant personal loan is sure to be among the top choices that you would usually consider, in terms of coming up with the required funds. This is primarily due to the convenience they offer, from the reduced TAT and loan disbursal time, to the minimal documentation required. Today, it is very easy to get an instant personal loan, owing to the vast number of banks, NBFCs, and FinTech companies that provide them. Whether you need a personal loan in Bangalore, or a personal loan in Chennai, you can get one in a matter of minutes.  While it is always a good idea to borrow only how much you require, it may so happen that you end up taking a number of such personal loans in quick succession. In such cases, your financial goals are sure to take a hit, because a lot of debt accumulation has now taken place. While keeping track of numerous EMI payments can be tough, there is an option that can make your life easier – con...
Read more

Tips to Get a Personal Loan with Low Credit

If you’ve ever borrowed a personal loan before, you’ll know exactly how important your credit score is for your personal loan’s approval. Your credit score is the gold standard against which all lenders across the country evaluate your loan approval. They use this to decide how risky it would be to sanction your loan. If you have a high credit score, you’d be a low-risk applicant for your lender. If your credit score is low, you’d most probably represent a high-risk proposition for your lender. Your credit score is a three-digit number that illustrates how financially responsible you are. It summarises how much credit you’ve availed of until now, your repayment behaviour, and your credit history. By now, you must be thinking that applicants with a low credit score cannot get a personal loan . But that’s not true. Here are four tips you can try to get a personal loan despite a low credit score: 1.Prove That You Have Good Repayment Capacity When it comes to getting a low credit personal ...
Read more