When an individual’s monthly expenses surpass the figure they receive at the end of every month, their savings, if they have any, tend to come to their rescue. But, sometimes, the expenses which were incurred during a month goes way past the income that was received during the same, which may make an individual consider taking up a salary advance loan or a Personal Loan from a lender like Muthoot Finance. Both such options always tend to achieve the same goal (Taking care of the expenses that you probably do not have the money for at the time being), so why must one of the credit options be chosen over the other?
Granted that the two appear fairly similar on paper, both, it must be kept in mind that both of them are loan products, and every kind of loan product works slightly differently than the other. This article will take you through the distinctions between a salary advance and a Muthoot Personal Loan and make a case for why a Muthoot Personal Loan be chosen over essentially drawing your salary in advance from a lending institution, which generally comes at a high cost. Read on to know more.
Salaried professionals who are looking to fulfil their short-term financial requirements may opt for a salary advance loan, as the same may seem like a fairly enticing option to them. It has a history of serving as a quick fix for an individual’s monetary troubles as it is disbursed within a few hours and requires minimal paperwork and zero collateral. But, there is always a good chance that if something sounds too good to be true, it probably is not. One of the things that separate a salary advance loan from a Muthoot Personal Loan is that in the case of the former, lending institutions tend to charge an astronomically high rate of interest to the prospective borrowers. The interest rates on salary advance loans are skyrocketing. In fact, a salary advance loan attracts one of the highest rates of interest in the loan market. To put it simply, the EMI amounts a borrower will have to pay will be significantly higher than the EMI amounts one will have to honour at the end of every month towards a Muthoot Personal Loan, which can possibly toss an individual’s monthly budget out of the window, which may make them take up another loan and take some of the money from that amount in order to pay off the first loan. If such an act is carried out repeatedly and frequently, a borrower can end up in a debt trap.
What you saw above is just one of the differences between a salary advance loan and a Muthoot Personal Loan. You will find a list of more of those below.
Availability: Muthoot is willing to provide personal loans to almost everyone who needs funds immediately, provided they meet the eligibility criteria. A salary advance loan, on the other hand, is only provided by a few lenders.
Accessibility: Only those who are drawing a salary from a company of repute can apply for and subsequently secure. Muthoot Personal Loans, on the other hand, can be applied for by both self-employed as well as salaried people.
Purpose and Loan Repayment Tenure: Salary advance loans are merely short-term fixes that need to be paid off fairly quickly and can only be used for meeting immediate expenses. A Muthoot Personal Loan, on the other hand, depending upon the amount that has been disbursed, can be repaid over a period of several years and can take care of medium-term to long-term expenses.
Rate of Interest: This is where a Muthoot Personal Loan wins. Muthoot Personal Loan interest rates are more competitive and are usually between 12-18%, which translates into lower EMIs. Salary Advance Loans, on the other hand, attract interest rates which are usually more than 20% p.a
Apart from the many advantages that it has, a Muthoot Personal Loan, as is evident already, is almost always easier to pay as their loan repayment tenures can be as high as several years. On the other hand, a salary advance loan is a short-term solution and has to be repaid over a period of 15 months at the most. When planning to take up a loan, it is advisable that one must set realistic goals in terms of repayment over a particular period of time. If an individual picks up a long repayment tenure and chooses a rate of interest that can be deemed affordable by them, a Muthoot Personal Loan can help an individual meet a variety of goals.
Before applying, you can always use the Personal Loan EMI Calculator online tool available at Finserv MARKETS in order to ascertain your monthly Muthoot Personal Loan repayment commitments and perhaps even compare them to those of a salary advance loan if you want to see the difference for yourself.
You can choose to take up a Muthoot Personal Loan through Finserv MARKETS and take care of those expenses that have you so worried. One can always do the same because the Muthoot Personal Loan amount that has been disbursed can be used for a multitude of personal uses and are granted without any collateral and can be repaid easily with the help of flexible repayment tenures.
If you are someone who would like to learn more about Personal Loans by Muthoot and other forms of credit offered by other Indian financial institutions, you can do the same on Finserv MARKETS.