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Everything You Need To Know About an Advance Salary Loan!


Have you ever been in a cash crunch at the end of the month? Those times when you got your salary on the 1st but were running low on money by the 20th?


While it's not an ideal situation and is something you should look at improving, here's something that could be helpful on those rare occasions - Advance Salary Loans!


What is an Advance Salary Loan?

Advance Salary Loan, as the name suggests is a short-term loan provided to salaried individuals, on the security of their salary. In times of emergencies when a person does not want to take a personal loan and cannot wait to receive the next salary, an Advance salary loan is useful.


The borrower is expected to repay this either in the form of instalments or when she receives her next salary.


So when should you take an Advance Salary Loan?

Most people take Advance Salary Loans for paying children’s school fees, house rent or deposit, major car repairs or a medical emergency. We recommend you do not take an Advance Salary Loan unless absolutely necessary.


Features of an Advance Salary Loan

Through our research across various apps and loan providers, we found the general range for the loans as follows -

  • Interest Rates – 1.5 per cent to 3 per cent per month

  • Loan Tenure - 3 to 36 months

  • Loan Amount – ₹ 5000 to ₹ 2 lakh

  • Loan approval within a few minutes or hours

  • Loan disbursal within 5 to 48 hours

  • The lender fixes the loan amount and repayment instalments depending on a number of factors such as your credit score, salary, existing loans and employment stability.


So when does it make sense to take an Advance Salary Loan?

  • Available to people with moderate credit scores who may find it difficult to obtain personal loans

  • Minimal paperwork (Most lenders have a completely online process)

  • Quick approval and disbursal of loan

  • Minimal processing and additional charges

  • Flexible payment terms including an auto-debit option

  • Minimal or zero prepayment and pre-closure charges


But is there a catch? What should I stay vary while taking an Advance Salary Loan?

  • Extremely high-interest rate is the biggest downside of an Advance Salary Loan. Most borrowers end up paying an annualized interest rate of almost 24-30 per cent, which is way higher than personal loan rates.

  • Due to the ease of getting an Advance Salary Loan, borrowers tend to over-borrow or frequently take these loans despite the high-interest rates.


Am I eligible to avail an Advance Salary Loan?*

  • Age – 21 to 55 years

  • Indian citizen/ Resident of India

  • Minimum salary of ₹ 15000 per month

*These are general eligibility guidelines, however, they can vary from lender to lender.


The process to obtain an Advance Salary Loan**

Step 1: Fill and submit the application form 

Step 2: Once approved, complete the Know Your Customer (KYC) and document submission

Step 3: Wait for document verification and loan approval

Step 4: If approved, the loan amount is deposited into your account

**This is the process to obtain an Advance Salary Loan, however it can vary from lender to lender.

Bottom Line

While the Advance Salary Loan is easy to take and requires lesser paperwork and compliance, it is extremely important to take a loan only when absolutely necessary. The high-interest rates should definitely not be overlooked or ignored. Be prudent and informed before taking a loan, especially in the case of advance salary loans as they can get you into the debt trap of living on the borrowings of the previous month.

This entire month we will be focusing on loans. Stay tuned as we discuss loans and credit scores and address the most common doubts on taking loans.

This article is written by Namrata Patel for Basis


Basis is a first-of-its-kind platform, aimed at enabling women to achieve financial independence through expert advice, in-app learning modules and supportive communities.

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