A Simple Guide to Avail a Salary-Based Loan

In today's day and age, the process of taking out a personal loan to meet your financial needs has become simpler and quicker, thanks to advancements in technology. India has also seen an increase in the number and type of personal loan providers over the past five to six years. You no longer need to stick to banks to meet their loan needs. You can now approach NBFCs and FinTech players because they have lenient eligibility criteria and a seamless online application. In case your personal loan application is rejected (for whatever reason), there are other options you can consider as well. In this article, we'll be talking about one such alternative known as a salary-based loan. This is a loan product provided to salaried employees who work under the payroll of registered companies for a fixed amount of money (salary) every month. Here are its key benefits:

1.Shorter Processing Time

The processing time required for salary-based loans is relatively shorter than typical bank loans. Suppose you're lucky enough to have a salary advance loan facility provided by your employer. In that case, you'll have to fill out a salary advance form for employees. After that, your employer will approve your request within 24 hours at most. If you don't have that facility in your organization and choose to approach an outside lender for a salary-based loan, it will get approved within a few minutes.  Just enter all your details correctly and ensure that your documents are in place. Once your loan application is approved, you will receive the funds directly into your bank account. 

2.Flexible Repayment Options

A salary-based loan also comes with flexible repayment options. In the case of a salary advance loan given to you by your employer, your monthly EMIs will be deducted from your monthly salary until it is fully paid off. As you can see, this is pretty convenient because you don't have to worry about keeping track of the payments. And if you've borrowed a salary-based loan from an outside lender, you just need to maintain enough money in your account. Every month, on the due date, your EMIs will get auto-debited. Many lenders today offer you the flexibility of choosing your repayment tenure based on your repayment capacity.

3.No Collateral Requirement

Another advantage of availing of a salary-based loan is that you don't have to worry about arranging collateral or security of any sort. If your employer provides salary advance loans, then the eligibility criteria are already lenient, to begin with. And most financial institutions that offer salary-based loans don't ask for collateral as well. As long as you meet the eligibility criteria and have the required documents, you're sorted.

Most lenders usually ask applicants to furnish an address proof, proof of identity, and bank statements for the past 3-6 months in terms of documentation. Along with this, you need to be aware of the various fees you may need to bear. This includes loan processing charges, check bounce charges, loan cancellation charges, and interest on overdue EMIs. All this apart from your interest rate, of course.

In Conclusion

Now that you've understood the benefits that come with salary-based loans, here are three more things to remember, should you need one. First, you must only apply for a loan when you need it. Second, your EMIs should always be affordable so that you don't struggle with them. Lastly, understand all the rates and charges and how they affect your loan's affordability.