Salary Advance Loans: Affordable Small Loans
Getting a small loan is not always easy and can be expensive. In fact, many people struggle finding affordable small loan lenders. In general, the smaller the loan, the higher the costs. Not to mention stricter repayment terms. This leads many borrowers to rely on payday type loans to access small amounts of cash. In a bid to provide borrowers with cheaper alternatives, many credit unions have created new products, one of which is the salary advance loan - ideal for those seeking $500 or less and have a regular paycheck.
What are Salary Advance Loans?
A salary advance loan is an inexpensive financing option for people seeking $500 or less – possibly more depending on the size of your paycheck. It is exactly as the name implies an advanced on your salary. You can think of them as a line of credit attached to your paycheck. Interest rates are generally a fraction of payday loans with many sitting around the 18% mark.
How Do Salary Advance Loans Work?
Salary advance loans require the borrower to open up a special advance cash account with a credit union. Typically, a 5-percent deposit is required to open the account. A higher amount may be required for those seeking loans higher than $500. Once the account has a positive balance of over $500, the interest rates for advances decrease.
Banks and credit unions typically have other requirements aside from a deposit. In some cases, credit union members will be required to have their paycheck directly deposited into their account.
Most loans that rely on salary advances require the loan to be paid back during the borrower's next pay period. Because the loan is based on salary, the amount of money a person can borrow is usually a third of their take-home pay, including interest. This amount varies depending on the relationship the borrower has with the bank and their credit history.
- No Fees
- Instant access
- Low interest rate
- Loan must be repaid with next pay
- Paycheck must be a direct deposit with lender
How to Apply for a Salary Advance Loan
Salary advance loans and cash account options are typically available through credit unions, although some banks may offer them. Borrowers need to have an existing relationship with the bank, as most institutions require direct deposit in order to issue a salary advance.
To learn more about salary advance loans, visit your bank or credit union. Every institution offers different terms and it is important to do research before making a decision. Salary advance loans are a convenient, low-cost financing option that can benefit a lot of borrowers.