EPf Advance Or Secondary Salary Loan? A Guide To Making The Best Choice

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In today’s financial world, there are many options available for people who need to borrow money. Two of the most commonly used loan options are EPF advance and secondary salary loans. These loans are designed to help people get access to cash they need for various reasons, but they work in different ways. So how do you decide which one is the best choice for your financial situation?

Understanding EPF Advance

EPF – the Employees Provident Fund – is a scheme that aims to help salaried individuals save for retirement. EPF provides financial benefits to employees in this scheme in the form of accumulated savings and interest earned over the years. One benefit of this scheme is that employees can take an EPF advance – a loan against their EPF savings – to cover any unforeseen expenses or emergencies.

When an employee takes an EPF advance, the money they borrow comes from the amount they have accumulated in their EPF savings account. The interest rate for an EPF advance is lower than that of a personal loan and this is why it is a popular choice for borrowers with EPF accounts.

However, there are certain limitations to EPF advances. Firstly, you can only borrow a certain amount depending on the reason you’re borrowing for. For example, you can only borrow up to three months of your basic salary for medical treatment, education, or to purchase a home. For other reasons such as marriage, you can borrow up to 50% of the savings accumulated in your EPF Account. 

Understanding Secondary Salary Loans

Secondary salary loans are also a popular option for individuals who need quick cash. Unlike EPF advance loans, secondary salary loans are not directly tied to any savings scheme. Instead, these loans are available to salaried individuals who can provide proof of income and meet other eligibility criteria.

The loan amount for a secondary salary loan depends on your salary bracket. Additionally, the interest rate for a secondary salary loan is usually higher than that of an EPF advance because it is not secured against any asset. These loans typically come with a repayment period of 12 to 60 months, and the loan amount can be used for any legal purpose.

Making the Choice between EPF Advance and Secondary Salary Loans

When it comes to deciding between an EPF advance and secondary salary loans, there are a few factors you need to consider:

1. Amount – The loan amount you require plays a crucial role in determining which loan option best suits your needs. EPF advances only allow you to borrow a certain amount depending on the reason you’re borrowing for. Meanwhile, secondary salary loans could allow you to borrow up to six times your monthly salary.

2. Repayment Period – The repayment period for an EPF advance is usually shorter, as the loan amount is limited to the number of months of your basic salary. On the other hand, secondary salary loans often come with a repayment period that can extend between 12 – 60 months, giving you more time to repay the loan.

3. Interest Rates and Charges – Interest rates are lower for EPF advances compared to secondary salary loans, but that is only subject to the amount you borrow. With secondary salary loans, the interest rate could be higher but when you’re looking to borrow an amount larger than your EPF balance, a secondary salary loan may be the best option.

4. Eligibility Criteria – While both options require you to meet specific eligibility criteria, the requirements are different. For an EPF advance, you need to have an active EPF savings account and meet their criteria. For secondary salary loans, you need to have a consistent income and have proof of it.

5. Purpose – Lastly, the purpose for which you need the loan plays a critical role. If the money is needed for an emergency such as a medical bill or education, then an EPF advance may be more appropriate. However, if you need the loan for other purposes or require a more significant amount, then a secondary salary loan may be a better option.


EPF advance and secondary salary loans are both useful loan options designed to help individuals access cash when they need it. While they serve almost the same purpose, they work in different ways. Understanding the differences between them can help you make the best choice that suits your financial requirements.

Overall, it is essential to keep in mind that both loans come with their own benefits and drawbacks. It’s vital to weigh the options available before making a decision. If you still find it difficult to make a decision, you can seek professional advice from a financial expert or a loan expert. Whatever you choose, make sure to borrow only the amount you need and ensure you can repay it on time to avoid accumulating debt.


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