Difference between advance salary and loan

Advance Salary is paying an employee a portion of their salary in advance. For example, if an employee has a medical emergency and needs their February salary in advance, the employer can pay them a portion of their salary beforehand. Advances are recovered in installments and are usually interest-free.

Loan, on the other hand, is a loan provided at a concessional interest rate rather than the market rate of interest. A loan can be for a larger amount and can be of various types, such as house loans, vehicle loans or education loans. The difference between the concessional rate of interest and the market rate can provide huge relief to employees seeking a loan.