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Published on Jun 30, 2021Updated on Apr 11, 2025
For most of us, salary is the primary source of income, using which we fulfill our daily needs and ensure financial security. But, one of the biggest disadvantages of salary is, they are fixed, while the expenses are not.
There are times when the expenses turn out to be more than our monthly salary, and at such times, our savings can bridge the gap. But, not always, we have that kind of flexibility to depend on savings to cover for the increased expenses.
In such a situation, many choose to borrow from friends and family members or take a loan from informal moneylenders. However, such solutions prove to be quite inconvenient in the long run.
This is where Personal loans can help. There are also other forms of loans, such as a Salary Advance Loan, a form of short-term unsecured loan, which you can avail to cover the expenses. But what is the difference between an Instant salary loan and regular personal loans? Let’s discuss these products in detail.
Advance Salary Loans are curated exclusively for salaried employees and professionals who require a small amount to cover some urgent need, and which can be repaid in less than 15 months. Advance salary loans differ from personal loans in one significant aspect, i.e., the rate of interest. The rate of interest on a salary loan is calculated on a monthly basis, where as personal loan interest rates are often charged at an annual basis..
Thus, the ROI and loan terms vary from one lending institution to another. There are several lenders who process salary loans in a matter of hours, which adds to the risk. Salary loans have a relatively high APR (Annual Percentage Rate). Thus, these loans are not suitable for borrowers who need a higher amount, and a longer tenure so that the resulting EMI doesn’t strain their finances.
Must Read: How Much Personal Loan Can You Take On Your Salary?
Must Read: How to Get a Personal Loan if you have Low Salary?
Salary Advance Loans can be highly beneficial when facing a financial emergency or in urgent need of cash. However, it should be treated as an option of last resort, due to the costs involved and mismanagement can lead to over-borrowing. If you need a larger amount and would like to pay it off in easy EMIs which can conveniently fit within your budget, a personal loan is the best choice.
* Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG India Credit. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG India Credit's policy at the time of loan application. If you wish to know more about our products and services, please contact us
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