Loan proves to be a very convenient path to fulfill our dreams. But it turns out to be dreadful if you don’t have the capacity to pay its monthly installments with interest. “Who goes a borrowing, goes a sorrowing.”
Most often we find ourselves coming across the situation where we require extra cash to manage our financial needs. We always need extra money to pay off for emergencies and immediate short-term needs.
There are two kinds of loans, which are mostly chosen by people to meet their financial requirements: Salary Loan and Personal Loan. As both these loans seem to be identical, therefore we should know which loan should be applied for in which situation. Let’s educate us by knowing the difference between two loans:
Personal Loans are the most flexible type of loans; a borrower can get. These loans are up to your credit worthiness. Personal loans in the Philippines are a very popular concept and are easily available at all local and international banks and financial institutions. It serves the same concept as a salary loan.
The personal loan carries a low rate of interest which makes it the foremost choice for every person to avail. In personal loans, lender of the loan does not set boundaries for which loan can be utilized.
Salary Loan is a type of loan which is taken either from your employer or from a government institution to which you have been rendering your services as an employee. It will be beneficial to take a salary loan from Pag – IBIG or SSS (Social Security System) as they have flexible terms and conditions and have relatively low rates of interest.
The salary loan can help anyone who has to fill a short term gap in cash flow. Salary loan turns out to be a beneficial solution for urgent expenses. The monthly repayments will simply be deducted directly from your salary.
Difference between Salary Loans and Personal Loans
- Availability: Personal loans can be availed from banks whereas Salary loans can be availed from government institutions or employer.
- Repayments: Repayments will be directly deducted from salary in case of Salary loan while personal loan has to be repaid on our own on a monthly basis.
- Repayment Value: As compared to Salary loan, the Personal loan is burdened up with a high rate of interest. It means that repayment value will be more in the case of the personal loan as compared to salary loan.
- Tenure: Personal loans are repaid over the tenure of 12 to 36 months. The rate of interest varies from bank to bank as OFW Loans in the Philippines. The salary loan can be paid up to 2 years.
- Dependability: Salary loan will be dependent on our current income whereas Personal loan depends on other factors also.
“Credit is a system whereby a person who can’t pay gets another person who can’t pay to guarantee that he can pay.” – By Charles Dickens