When employees need urgent financial support—whether for a medical emergency, gadget purchase, or education—employee loans offer a reliable solution. But there’s often confusion between interest-free loans and low-interest employee loans. So, which one should you go for in 2025?
Here’s a detailed comparison to help you make a smart financial decision—with insights from Vizzve Finance, your trusted lending partner.
What is an Interest-Free Employee Loan?
An interest-free loan is typically offered by employers as a short-term financial benefit. The employee repays only the principal amount, with no additional interest.
Pros:
Zero interest = zero additional cost
Great for small, short-term needs
Usually processed internally, often faster
Cons:
Limited to employer policy
May be taxable as a perquisite under Indian Income Tax Act if it exceeds ₹20,000
Not always available or reliable
No credit score benefit
What is a Low-Interest Employee Loan?
A low-interest employee loan—like those offered via NBFCs such as Vizzve Finance—comes with significantly reduced interest rates (starting from 1.3% per month), and quick, flexible repayment options.
Pros:
Higher loan limits (up to ₹5 lakhs with Vizzve)
No tax on loan amount or interest
Improves credit score when repaid on time
Can be used for multiple purposes: medical, home, gadgets, education, etc.
100% digital application, no employer approval needed
Cons:
Some interest payable, though much lower than market rates
EMI obligations must be met regularly
Comparison Table
| Feature | Interest-Free Loan | Low-Interest Loan (Vizzve) |
|---|---|---|
| Interest | 0% | Starts from 1.3% per month |
| Taxable Benefit (Perquisite) | Yes (if > ₹20,000) | No |
| Approval Speed | Depends on HR/Admin | Instant (within 10 minutes) |
| Loan Limit | Usually Low | ₹5,000 – ₹5,00,000 |
| Credit Score Impact | None | Positive with timely EMIs |
| Eligibility | Employer-dependent | Any salaried individual |
| Application Mode | Offline/Internal | 100% Online via Vizzve App |
So, Which Is Better?
✅ Use an interest-free loan when:
The loan amount is small (under ₹20,000)
You need quick help directly from your employer
You don’t mind limited repayment options
✅ Choose a low-interest loan (like Vizzve) when:
You need larger loan amounts
Want to avoid tax complications
Prefer digital convenience, instant approval, and credit score building
Example Use Case:
Rahul, an IT employee, needed ₹1,20,000 for his child's education. His employer offered only ₹20,000 interest-free. He chose Vizzve Finance for the full amount at a low interest, repaid in 12 easy EMIs—and improved his credit score too.
FAQs –
1. Is the interest-free loan better than a low-interest loan?
Only for small, tax-exempt amounts. For bigger needs, low-interest loans offer better flexibility and credit advantages.
2. Will I get a tax deduction for repaying either type?
No tax deduction on repayment, but low-interest loans are not taxed as perquisite, unlike interest-free loans.
3. Can I take both types of loans?
Yes. You can avail a small interest-free loan from your employer and a larger personal loan from Vizzve simultaneously.
4. Do low-interest loans impact my CIBIL score?
Yes, positively—if EMIs are paid on time.
5. What is the fastest way to get a low-interest employee loan?
Apply via the Vizzve Finance app and get disbursal in under 24 hours.
Published on : 25th July
Published by : SMITA
www.vizzve.com || www.vizzveservices.com
Follow us on social media: Facebook || Linkedin || Instagram
🛡 Powered by Vizzve Financial
RBI-Registered Loan Partner | 10 Lakh+ Customers | ₹600 Cr+ Disbursed