If you haven’t gotten your paycheck yet, and don’t want to tap into your savings, why not consider a salary advance?
What Is A Salary Advance Loan?
A salary advance is a loan that you take out against your next paycheck. Salary advances, like other loans, include a payback schedule, interest charges, and additional fees. This means that the loan and interest will be deducted from your paycheck, depending on the terms and conditions of the advance payment. You may want to read part one of this article to know more…
Advantages Of A Salary Advance Loan
The temptation will be there whenever you learn that your employer offers advanced programs; from that moment, you will find any excuse to take it. But just as with any borrowing (from the bank or other financial institution), there are advantages and disadvantages. Let’s look at the benefits;
Paycheck advances give you comfortable, quick access to money for an emergency. Employers and credit unions can deposit payments into your regular pay account since they are the lenders.
Chances Of Approval Are High
Unlike other loans, salary advance loans usually have fewer credit conditions. All you have to do is meet your employer’s basic program requirements.
Interest Rates Are Lower
Paycheck advances typically have lower interest rates than other types of credit. You’ll almost certainly get a lower interest rate than if you took out a payday loan or used a credit card.
The Payment Is Made Automatically
Paying back your wage advance is usually straightforward. The amount borrowed, including any interest and costs, can be deducted from your paycheck by your company or credit union.
Disadvantages Of A Salary Advance Loan
You may be wowed by the several advantages now, but wait before you go for an advance. Let’s look at the different drawbacks…
Reduction Of Your Next Paycheck
The majority of advances are repaid on your next payment. If you’re having trouble making ends meet, cutting into your next salary to gain cash now might not be the best option.
Borrowing Limits Are Low
The majority of businesses will only allow you to take a few hundred dollars as a deposit. If you need to cover a substantial expense, a pay advance might not be sufficient.
Possibility of Causing Harm to Your Employer-Employee Relationship
Borrowing against your paycheck could harm your working relationship. They may view you as irresponsible, which could jeopardize your future employment possibilities with the organization.
On the other hand, taking a pay advance implies you’ll be in debt to your employer. If you decide to resign, there’s a big chance you’ll have to pay back the loan plus interest right away.
Should You Consider Salary Advance Loan?
Now that you know everything about salary advances, you may see what you want to do. Borrowing money is very personal, and no one will be able to decide whether you should make it or not; the decision is all yours.
If you are considering going for an advance, you should remember to only ask in case of emergency. If you can wait and save, then do it that way. Do not take advances for silly reasons, as you find yourself in a state of emergency where you will need to take an advance – thus finding yourself in an awkward situation. And if ever you need an advance look if there are no other options.
If you are borrowing, take time to understand the requirements, repayment, and interest. Even if you have a big paycheck each month, it is best to practice good financial habits to avoid seeing yourself in these situations. Let us know in the comments what do you think about salary advances…