Introduction To Salary Loan
What is Personal Salary Loan?
A personal salary loan is a loan that does not need collateral or security and is available with minimum paperwork. You may apply for this loan to meet any reasonable financial necessity. You must return it in line with the terms agreed upon with the bank, just as you would any other loan.
How does a personal loan work?
Personal loans are a form of installment credit. Unlike a credit card, a personal loan provides borrowers with a one-time cash payment. Borrowers then repay that amount plus interest in regular monthly payments during the loan’s term.
Risk of personal Loan
If you have a secured loan, your lender may be able to reclaim something you own, such as your automobile. A missed payment might be reported to credit agencies by your lender, which means it will appear on your credit history and may affect your ability to obtain credit in the future.
What is Payday Loan?
Payday loans are short-term loans for modest sums of money. They are accessible at retail stores and on the internet. Payday loans are simple to obtain, but the interest rates are outrageous. It merely signifies a payday loan is a sort of short-term borrowing in which a lender extends high-interest credit based on your income.
How does a Payday Work?
Payday loans are usually for two weeks. You can write a post-dated check or enter a debit card number and receive the cash the same day. When the check’s expiration date arrives, the lender will cash it to pay off the loan in full.
What is Salary Advance Loan?
Salary advance loans are short-term loans given to paid employees. As the names suggest, it is often paid as part of an employee’s monthly salary. Naturally, only those having a paid job are eligible for this loan. It may be used for anything, such as medical costs, large purchases, or any other emergency. A loan is an amount obtained for long-term financial demands – a type of debt that is repaid over time.
How does it Work?
An advance salary is an authorized loan in which the employer forgoes salaries from the employee’s future paychecks to make repayments. Furthermore, an advance salary is a private agreement between an employee and a company in which the employer promises to share a future pay before your monthly payday.
You can deduct the whole payback amount from one of your paychecks or a lower amount from several future paychecks.
Apart from private enterprises, various financial institutions and non-banking financial corporations (NBFCs) provide advance salary loans to salaried persons at a low-interest rate. Advance income enables you to pay for expenses such as travel, university fees, electricity payments, credit card bills, or unexpected medical problems.
Advance pay is growing in popularity among young paid professionals who are short on cash at the end of the month.
Salary loan categories
Salary loan Factor 1: Salary loan for private employees
Obtaining a loan as a private sector employee demands an extra layer of assurance. Unlike government occupations, private jobs are less secure.
Things might be somewhat different if you have been with the organization for a long time and have a significant job.
How to Get a Loan in the Private Sector
Working in the private sector demands additional collateral for your loan. Depending on the size of the loan, you may be needed to supply 1 or 2 guarantors.
You will need the following to apply for a loan:
6 Months Deposit Salary Account Statement:
1. A letter of employment.
2. Bank Verification Code
3. A valid national identification card.
4. Work identification card
5. A guarantee.
If all of your paperwork and credentials are real and valid, you will get your loan authorized within 24 hours. Before your loan may be accepted, you may need to communicate with your employer to negotiate loan payments.
Salary loans for public employees
Salary loan Factor 2: Loan financing for civil servants in Lagos State.
The Lagos state government also has a payment system for their employees called ORACLE, which is similar to the IPPIS system. You may use the Oracle number to apply for a loan without collateral and get it approved immediately.
To begin your loan application, you will need the following:
1. Six-month paycheck statement
2. Salary Account Bank Statement for the Previous 6 Months
3. Letter of Employment / Confirmation / Deployment 4. Bank Verification Number
5. A valid national identification card
6. Work identification card
Salary loan requirements
If all of your records and credentials are real and proper, there is no need to worry; your loan will be granted within 24 hours.
Salary loan Factor 3: Loans for Federal Government Employees in Nigeria
Federal government employees in Nigeria have one of the most secure jobs in the country, making it simple for them to apply for a loan from any financial institution.
The federal government of Nigeria has an IPPIS system for paying salaries, making it even easier to request a loan without collateral.
The FG has declared that it would commence the complete deployment of the Integrated Personnel and Payroll Information System in October 2019. (IPPIS).
As a lender, and to assure security and trustworthiness, we have worked with the Federal Government of Nigeria to distribute loans to anybody holding an IPPIS number.
What Is IPPIS?
The IPPIS stands for Integrated Payroll and Personnel Information System, which was created by the Federal Government of Nigeria to assist in monitoring the financial intake of wages in government agencies and parastatals through appropriate remittances and deductions of third-party payments.
Salary Loan Factor 4: Who Is Eligible To Submit An IPPIS Application?
Only people who work in government ministries, departments, or agencies are permitted to register for the Integrated Payroll and Personnel Information System (IPPIS), which allows the government to conveniently send salaries to the bank accounts of government employees.
How to Apply for a Loan with an IPPIS Number
If you have a validated IPPIS number and have started receiving your pay through IPPIS, you can apply for any loan.
To begin your loan application, you will need the following:
IPPIS code.
6 Months Pay Stub
Salary Account Bank Statement for the Previous 6 Months
Letter of Employment / Confirmation / Deployment
Bank Verification Code
A valid national identification card.
Work identification card
Salary Loan Factor 5: Difference between Salary Advance loans vs. personal loans vs. Payday Loan
| Salary Advance Loan | Personal Loan | Payday Loan |
| Salary advance loans are short-term loans made available to salaried professionals. It may be used for anything, including medical costs, large purchases, or any other emergency. | It is a loan given to you as an individual by a bank or financial organization without the requirement of any collateral or security. That is why it is known as an unsecured loan. | Payday Loan is a quick loan option for people (both salary and non-salary earners). With this loan product, you may borrow money at a cheap interest rate with little or no paperwork or collateral. |
| You must be in employment to access this loan | You don’t necessarily need to be in employment as long as you can show how you will repay the loan back | This is a loan that works for income earners majorly for freelance, salary, and consultants who earn income that is not necessarily salary |
Salary Loan Factor 6: Salary Advance Loans
What should you be conscious of before taking out a salary advance loan?
Salary Advance policy educates you on the facts you must have before applying for a loan in Nigeria. Among them are:
Are you qualified for a loan? Typically, the eligibility conditions are for persons who earn a certain amount each month. This means that only people who work for a salary are eligible for this loan.
What proportion of your pay do you require: Unless you ask for a certain percentage of your salary, a salary advance loan cannot provide you your entire salary as a loan? Before applying for a loan, you should know exactly what you require.
How much will I pay in return? It is usually a good idea to double-check this because certain interest rates might be excessive. Always go for a loan with a low-interest rate. To avoid lamenting and regret when the deduction starts after you have used up the money.
Salary advance loan requirements
To begin your loan application, you will need the following:
1. Six-month paycheck statement
2. Salary Account Bank Statement for the Previous 6 Months
3. Letter of Employment / Confirmation / Deployment 4. Bank Verification Number
5. A valid national identification card
6. Work identification card
Conclusion
If you need money for an emergency, there are various options for borrowing it. One option is a salary advance loan, which is simple to obtain but may require an extra interest rate compared to a personal loan but you can take more than 2 times your salary which will depend on a lot of factors and criteria. A personal loan is another alternative especially if you are seeking the smaller amount of money in a loan but has a significantly lower interest rate.
A simple online personal loan calculator will assist you in determining the appropriate payment amount and interest rate for your budget. When it comes to borrowing money, payday loans are nearly always more costly and riskier than personal loans. If you are qualified for a personal loan, selecting this option will allow you to borrow more money, offer you more time to repay it, and charge you less interest.
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