How an Earned Salary Advance is better than a Personal Loan?

Have you ever faced a cash crunch at the end of a month? Feeling helpless in times of need can be a nightmare. As per the Indian Express report, 80% of the Indian employees are living paycheck to paycheck as they consume all the funds by the time the next pay day comes. In such scenarios, one might seek help from family or friends but everyone’s hands get tied at some point and they can only aid us till a certain extent. An instant earned salary advance can be your ‘friend in need’ in such instances.

You would have received many suggestions to plan your savings or to invest some chunk of your salary in investment options like Mutual Funds, Fixed Deposits, Recurring Deposits, etc. You might have also saved to meet your emergency fund requirements but what if that money is not enough to cover the emergency? There might come a situation where you do have the money in savings but they are not enough to meet the crisis.

You may apply for an instant personal loan but that too is provided with a requirement to pay in the minimum time frame of 3-12 months additionally, with high-interest rates, processing fees, bounce charges, etc. It is tedious to pay the EMI for a continuous period with a high rate of interest. To overcome this situation, ‘earned salary advance’ is the solution you might need. 

WHAT IS EARNED SALARY ADVANCE?

Earned Salary Advance is a facility in which you can withdraw your earned salary at any point during the month. With such nature, it’s low-cost and easy to avail credit products. In a nutshell, this product gives you access to your earned salary at any point in time and you wouldn’t have to wait for the next payday. This fulfills the urgent need for small funds from your salary itself. The said feature saves you from unnecessary short-term loans which may create hassles, as they require a good credit score, high-interest rates, processing fees, bounce charges, penalty on late payments, and quite a few hidden charges.

The concept of earned salary advance is picking up speed like wind and this type of short-term credit facility is there to help the workers or employees whose earnings are on the lower end of the salary spectrum and cannot get a loan from any bank, NBFCs or other lending entities. Through this facility, employees can get an instant disbursement of salary advance in one click with a minimal amount of convenience fee and no hidden charges.

As per a study, Indian SMEs are currently facing a huge credit gap of around $330 billion . They can’t support their employees when it comes to advance salaries as they’re facing cash flow issues too. A rise in non-justice can arise if only a handful of applicants are getting access to this benefit. 

Today, only selected organizations including Zimyo provide such benefits to their employees. However, what sets Zimyo apart is that as an end-to-end human capital management suite, its benefits branch out to all the users on its platform and not just their own employees.

WHY SHOULD YOU CHOOSE AN INSTANT EARNED SALARY ADVANCE OVER A PERSONAL LOAN?

#1 No barrier of Age and Income- Age and income become a hurdle when wanting to get a loan approved. Banks are reluctant to lend money if a person’s salary is minimal and because of a low income you might face high-interest rates or be required to present extra collateral. On the other hand, if the employee is a salaried professional and drawing a steady salary then they can easily avail the facility of an earned salary advance.

#2 No Credit Score required- A loan from any traditional institution requires a credit score but for salary advance, there is no such requirement as the majority of the millennial employees don’t have a credit score and for creating one – you need to take a loan or other credit product. So an earned salary advance may be a good opportunity to get the fund without pulling the CIBIL score.

#3 More Flexibility- An earned salary advance procedure has always been more convenient and flexible with the amount and interest rates as compared to loans. Earned Salary Advance is traditionally deducted from same month’s salary which will make the repayment easier.

#4 No Rate of Interest- Salary advance charges a lower rate of interest as compared to the loans which levy high-interest charges. With Zimyo we don’t charge any rate of interest from the individual but he/she still would need to pay a small amount of convenience fee which is classified on the basis of salary range slabs.

 #5 Quick Disbursal- Getting a loan sanctioned from a bank can take days that turn into weeks and weeks that can turn into months as well. Additionally, a time-consuming task due to the amount of documentation involved. Loans necessitate the additional paperwork and take longer. It can take anywhere from 7-15 days for a bank to approve a loan and transmit the funds. However, because the entire process is performed electronically, advance against pay does not take much time or paperwork and can be made possible in a couple of minutes.

#6 Easy Repayment- The repayment period of an instant personal loan is up to 5 years and can put you in debt. Non-repayment can harm your credit score and may lead to a rejection of any of the loans requested in future. On the flip side, in the earned salary advance the said amount will be deducted from the same month’s salary.

#7 Unexpected Emergencies- Unexpected events such as illness or hospitalization can push your budget off track. An advance salary is a far better option than breaking fixed deposits or acquiring an emergency loan with an even higher interest rate. This option helps you avoid any future budget cuts.

To deduce the points made valid in the above pages, Zimyo’s earned salary advance resolves these key points:

  • Instant application and approval. Thus, reducing the time for any paperwork and permissions and allowing the employees more time to focus on the emergency at hand.
  • Quick disbursal into the salary account. Without the need for hop jumps like CIBIL score and unnecessary documentation the funds directly get transferred to your salary account.
  • No interest charges. Thus, giving mental contentment as one wouldn’t need to worry about the piling interest charges
  • Easy repayment of the advance amount as it will automatically be deducted on the next payday.

Also Read: Impact Of Employee Benefits On Hiring & Employee Engagement

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