Lokesh Vaddla, 28, Bengaluru
IT Services Professional
Has taken salary advances from
EarlySalary several times over the
last one year. Chooses this option
because of the ease of repayment,
which is either within 30 days or
split into EMIs over 3 months.
Likes the process and instant cash.
Borrowed `22,000 from
EarlySalary.Com last month to
meet medical expenses related
to health tests of a family
member. He has to pay back a
total amount of `23,500 over
three months.
Photo: Deepak G pawar
undergoing this we thought the borrower could
just take a small loan of `10,000 and pay back
soon as salary was credited. It is not something
which is given every month and only approved
in the time of need,” says Dhiren Makhija,
co-founder, Cashkumar.
A word of caution
As attractive as borrowing may seem from
these platforms due to their user-oriented
interfaces and processes, do not plunge into
a borrowing spree just because the service
comes in handy and offers flexible re-payment
options. Remember, that a salary advance is
still a loan and you need to pay it back with
interest as soon as you receive your salary. So,
if you have taken a salary advance of `20,000
this month, your effective salary next month
will be `20,000 less. Says Chenthil Iyer, CEO,
Horus Financial Consultants and author of
Everyone has an Eye on Your Wallet! Do You?,
“Anyone going for a salary advance loan should
really think why one’s expenses are more than
the income. If it is due to some temporary
emergencies, it is alright to borrow, but
care should be taken to create one’s own
emergency reserves instead of having to
depend on such loans. A conscious budgeting
exercise can also help one prevent needing
such expensive loans.”
Another important thing to consider when
taking salary advance loan is how it will affect
your credit score. If you take a salary advance
and pay it back on time, it will facilitate
building a healthy credit score, especially if you
are new to credit and do not have any credit
history. “We feed data on loan performance
back to all four credit bureaus each month
helping form users’ credit scores, which
would help them get access to other formats
of credit instruments like home, personal,
and car loans,” says Mehrotra. But for reasons
mentioned above, while salary advance may
come in handy during a cash requirement, it is
best not to make a habit of it.
Remember the time when one had to stand
by the roadside and flag down a cab? Then
entered technology and changed it all. It is the
same for your finances. If used wisely, a salary
advance will help you tide over end of the
month financial shortage.
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www.outlookmoney.com December 2017 Outlook Money
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