Should I choose a personal loan or a salary advance loan?

Should I choose a personal loan or a salary advance loan?

Shortage of money happens to all of us at one time or the other. You have worked out all your monthly expenses but an unexpected medical expense or a home repair has cropped up. Perhaps you have saved some of your monthly income for emergencies. But what if the money you saved is not enough to cover this immediate need?

Fortunately, banks and financial institutions have come out with a wide range of borrowing options tailored for every such need. But which would you choose — a personal loan or a salary advance loan?

Simply put, a Salary Advance Loan is a short-term loan offered to salaried professionals. It is an advance against your salary, which will be deducted from your next paycheck.  A Personal Loan, on the other hand, is an amount borrowed from a bank or lending institution that is repaid over a longer period.

Questions to ask before you decide between a personal loan and a salary advance loan:

  1. How much do I need? How quickly do I have to pay it back?

If the amount needed is a smaller amount and a short-term sudden requirement, it makes sense to take a salary advance loan. Typically, a salary advance loan would not have a tenure of more than 12 months. If you are looking for larger amounts of money for investments like a car, a house, or educational expenses, a personal loan would be the right one for you.  You can take a personal loan for higher amounts and pay it back over a year or 18 months. So, if a long-term financial commitment is suitable, a personal loan is a better choice.

  1. Why do I need this? Can I pay it back? And what, in my financial situation, is the real reason I’m considering this? Do my age and income matter?

If you are at the beginning of your career and your income is on the lower side, a bank may not be too willing to lend you money. Your credit score may perhaps be low or you may not have a credit score if you have not taken a loan earlier. In this situation, a salary advance loan would work out better because the bank would look at factors other than your credit score to determine your loan terms.  However, if your income is higher and you have a good credit score, and your employer enjoys a good reputation, a personal loan will be easily approved as you have the capacity to repay it. To be eligible for a personal loan, you can also be self-employed with a steady income source.

  1. How quickly do I need the money?

In general, it is quicker to have a salary advance loan approved as personal loan approvals may take a week to 10 days. However, pre-approved personal loans do get approved in a much shorter time. A third-party loan aggregator would help you process even a personal loan quickly especially if you know the exact amount that you wish to borrow. Today, some institutions also have apps that make the whole process quick and easy and handled entirely online.

  1. How will a loan affect my credit score?

An essential requirement for a personal loan is a high Credit Score. This score cannot be built overnight. With a salary advance, you can get a short-term loan up to Rs 2 lakh even at a lower score.

To maintain a good credit score, two important factors are on-time payments and credit utilization. Even with a low credit score, you can get a salary advance loan.

  1. How much will I pay in interest? How much will it cost me?

Interest rate and monthly payment are both determined by the length of the loan you choose. In general, if your monthly payment is low and the tenure is long, the interest rate will be higher. The interest rate also depends on your credit score. In the case of a personal loan, you can choose the repayment plan that suits your income level and cash flow, but the repayment schedule is rigid. A salary advance loan lets you borrow and repay in flexible monthly payments. You may even be able to repay the entire amount in one go. There is no penalty for pre-payment of your salary advance loan. Your personal loan however has a fee for paying up earlier than the tenure of the loan.

Some personal loans also have a sign-up fee or origination fee, while a salary advance loan would not have a fee. Salary advance loans are ideal for cash-strapped individuals who want quick loans to fund sudden expenses until their salary is credited.

The bottom line

Salary loans can prevent a cash crunch in early days of employment, and you would not need to break a fixed deposit for sudden expenses. However, with a clear repayment plan, a personal loan would help finance your home or consolidate your debt. Both loans are primarily different based on the interest paid, the tenure and the terms of repayment. OneNDF provides you with a one-stop platform to answer all your queries and choose the best loan option for you.

At OneNDF, we will help you analyse key criteria like processing fees, interest rates, tenure and other features and our team will offer you best-in-class support and help to get loan solutions with minimal hassles.

Log in to our website at and be a part of the #OneNDF experience. If you are looking for any assistance or queries with regards to financial decisions feel free to connect with us at 7810844844 or email us at

Reach out to us on:

Facebook Page                                                                       Twitter Page

Instagram Page                                                                     LinkedIn Page

Blog Page                                                                                Updated News

No Thoughts on Should I choose a personal loan or a salary advance loan?

Leave A Comment