5 Benefits of Opting for a Salary-Based Loan

No matter how frugal you are with your monthly expenses or how well-crafted your monthly budget is, there will be times when you'll be out of cash. This may be for sudden medical emergencies, unexpected expenses, or managing a month-end cash crunch. In these scenarios, it is common for people to turn to personal loans to help them out. But while personal loans are a great option to money for financial emergencies, what if you're not eligible for one in the first place? Your loan provider may also reject your application for reasons you may not know. So, it's essential to have an alternative you can count on. In this article, we're going to tell you about one such option – a salary-based loan. It is usually availed of by salaried professionals to meet short-term financial needs with the installments being deducted from their salary itself. Here are five benefits of opting for such a loan:

1. Higher Chances of Approval

Your age and income levels matter to your personal loan provider when you approach them for a personal loan. Suppose you've just started working, and your monthly salary is on the lower side. In that case, your personal loan application will likely be rejected. This is terrible news, especially for a first-time borrower. The good news is that salary-based loan providers look at more factors while judging your repayment ability, not just your age and income. So, if you're a first-time borrower, the chances of you getting a salary-based loan are higher.

2. Your Credit Score is Not a Deterrent

When you apply for a personal loan from most financial institutions, your credit score will be the first thing they will consider. It is also the main parameter based on which they judge your eligibility and which also decides how high (or low) your interest rate will be. If you’re in the early stages of your career, you may not have a credit score to speak of. So, traditional lenders like banks will anyway be hesitant to give you a personal loan. When you apply for a salary-based loan, not only will you get money to take care of your needs, it will also help build your credit score as a salary-based loan is also a form of credit. This is because your lender looks at other parameters (like social media footprint, savings & investment data) to ascertain your creditworthiness.

3. Low-Interest Rates

Suppose you've just begun working and want to take out a personal loan. In that case, chances are your interest rate of interest will be high, or you’ll be asked to provide collateral. If you’ve just started your journey as a borrower, you won’t be able to do either of these things. But you don’t have to worry about this with a salary-based loan. They come with low interest rates, and you are charged only for the amount you use. For example, you may be offered a credit limit of ₹1 Lakh. But if you use only ₹25,000, you will be charged interest only on this amount.

4. Ease of Access

Availability of a salary-based loan (or a salary advance, as some lenders call it) is also very easy when you look at the application process today. Many loan providers have their own salary loan appthrough which you can apply for a loan. The application process will take place entirely on the app, which means that you can avail of the loan on your phone itself. Once your application is approved, you'll receive the funds directly into your bank account as well. The entire process will take only a few hours at most if you have all your documents handy.

5. Flexible Repayment

You don’t have to worry about payment hassles when it comes to salary-based loans. Your loan installments will automatically be deducted from your salary, making payment more manageable. This will also ensure your loan's timely repayment, which will further help you build your credit score.

Wrap Up

The above benefits of a salary-based loan are sure to make the process of borrowing money easier and simpler for everyone who avails of such a loan. Factors like quick approvals and direct bank transfer make the application process that much easier. If you’re a salaried professional looking for emergency funds, a salary-based loan from KreditBee will surely help you. KreditBee is India’s leading personal loan platform that offers loans through its mobile app. To get more information on how you can avail of a salary-based loan, email us at [email protected], and we will take it from there.