Are you a salary earner with an urgent financial need? You have nothing to fear as getting a salary advance as a loan in Nigeria may just be the best thing to have happened. Get some tips on how to get a salary advance as a loan in Nigeria.
By banking with the right institution and working in the right establishment, you are eligible for a loan in the form of a salary advance.
This loan is usually short-term, and it comes with friendly interest rates. Also, there are terms associated with repayment. You can make it once at the end of every month, or once every three months.
What is a salary advance?
A salary advance is a loan that lets you borrow money from your future pay cheque. Essentially, what this means is that you get paid your salary before it is due. Salary advances can be used to cover emergency expenses and pay it back when you get paid.
As with other loans, salary advances involve a repayment schedule, interest charges, and potential fees.
Depending on the amount borrowed, most salary advance loans in Nigeria are repaid on your next payday. This means the full amount of advance payment, including interest and fees, will come out of your next paycheck.
Others are known to spread the payment across several months.
Nigerian banks are known to offer as high as 60 percent of the average take-home pay to borrowers.
Salary Advance should not be confused with payday loans. They sound similar but vary in their nature. Some payday lenders even advertise their products as payday advances. However, payday loans and salary advances are not the same.
Salary Advance Vs. Payday Loan
The major difference between a salary advance and a payday loan is the platform offering the loan and the repayment terms.
A salary advance comes from your employer. Some companies offer advances as private loans directly to employees. Other employers sponsor a credit union just for employees.
Unlike payday loans, salary advances usually come cheap with little interest rates and no fees attached.
The amount you can borrow with salary advance depends on your take-home pay. It is usually about 40% of your pay cheque or higher.
Payday loans on the other hand will look at your credit score and other factors to determine how much is on offer. They also come with fees attached.
With salary advances, there are no chances of rolling the amount borrowed over. That is not the case with payday loans.
How to get a Salary Advance in Nigeria
Salary Advance is a small, short-term unsecured loan that relies on the borrower having previous payroll and employment records. With a salary advance in Nigeria, you repay it either out of your next paycheck or over an agreed time span.
It requires your employer’s permission and some companies restrict the circumstances under which they’ll green-light an advance.
Advantages of Salary Advance
Advantages for the borrower using this type of service are:
The facility is continuing, readily available, and can be used for any purpose. There is no need to re-negotiate a new loan for each present or future need.
There is a fixed monthly payment that covers repayment of both principal and interest so that borrowers know the precise amount of their commitment each month.
The cost of borrowing is less than most forms of installment finance. In some cases, when the borrowing facility is not required, the monthly transfers create an interest-bearing savings account.
To sum it up, salary advances come with the following advantages:
Convenience and flexibility
A salary advance is much more convenient with its procedures and is flexible with the amount and interest rates as compared to a loan.
In most cases, the salary advance is deducted from future payslips, which makes the repayment easier. You don’t need to save up the money separately for the repayment of the advance.
A salary advance is seen as a far better option than a regular loan when it comes to unexpected emergencies. It has proven to be a better option instead of taking an emergency loan with a high-interest rate.
A salary advance can help you get started even on long-term plans such as buying a house or a car. A salary advance helps you pay off a large and sudden amount of money, be it hospital bills, or money for a vacation.
Traditional loans in Nigeria, whether from a bank or other platforms, often come with strict and stringent payment dates. The lack of money at such times often results in borrowers defaulting on their payments.
This is never the case with a salary advance. In most cases, they are directly deducted from the borrower’s pay cheque. Repayment schedules are aligned with the payday to avoid any lack of cash during the repayment period.
Salary advances are much quicker to disburse since the required documentation is already available with the borrower’s employer.
Salary advances have very low-interest rates. This helps avoid piling on to the already existing cash crunch that you may have. Salary advances also levy interest rates only on the money that is drawn and used, as opposed to other platforms where the interest is levied on the accumulated amount as soon as it is disbursed.
Banks that offer salary advance as a loan in Nigeria
While salary advances are not the same as your conventional loans, there are banks that work together with business owners to offer employees salary advances.
Some of them are listed below.
First Bank – FirstAdvance
FirstAdvance by the premier bank, First Bank, is a digital lending solution designed to offer convenient and easy access to cash for payroll customers awaiting payment of their salaries.
The product is meant for salary earners whose accounts are domiciled with the bank and who have received regular salaries in the last six months or more.
The maximum amount accessible is 50% of the net average three months’ salary, whichever is lower. The eligible amount is calculated after deducting all other loan obligations to the Bank.
GTBank – Salary Advance
With GTBank Salary Advance, employees can get up to 50% of their net monthly salary upfront.
This loan is available to staff of private companies and government agencies with active salary accounts domiciled in GTBank.
It also comes with a tenor of 30 days and does not require any form of collateral. The Minimum salary of ₦ 25,000 for the public sector and ₦50,000 for private sector employees is required to access the loan.
Stanbic IBTC – Salary Advance
With Stanbic IBTC, borrowers can apply for a Salary Advance to help them get through tough times.
The revolving loan gives borrowers access to funds whenever they need it without having to reapply for credit – you simply need to repay 15% of your loan.
To access it, borrowers’ salary accounts must be domiciled with the bank and they must earn at least N40 000 per month. They are also required to have been with their employer for at least six months.
Polaris Salary Advance
Polaris Salary Advance offers borrowers up to 50% of their next salary in advance. The salary advance is processed and disbursed in less than 1 minute using its USSD code *833*12#.
One of its requirements is that applicants must be in employment with reputable organizations in both private and public sectors.
Access Bank Salary Advance
If you need an advance, salary Advance can come through before your salary is paid.
Access Bank says that it offers up to 100% of borrowers’ net monthly salary which can be repaid for three months with Salary Advance.
The application can be done conveniently via its QuickBucks App or USSD code *901*11*1#. No documentation and no collateral are required to access the loan.
Zenith Bank – Salary Advance
Zenith Bank’s Salary Advance is a revolving credit with a clean-up cycle availing borrowers up to 60% of their net monthly salary.
The loan is a flexible funding solution that helps individuals address short-term financial needs.