You can at times need some money to cover crises. In these situations, you frequently decide to hunt for loans that are authorized instantly. Loans come in a wide variety of forms, but personal loans are likely the most popular. People mostly take out personal loans since they are the most viable approach to get quick cash to handle emergency situations. In a Personal Loan, you can use the funds for personal or business uses without any usage restrictions. The interest rate on Personal loan will vary based on your eligibility factors such age, income, work experience, Civil Score etc. A Personal Loan overdraft facility on the other hand exempt from paying interest on unused amounts. In light of this, there is no fixed EMI-based payment. Let’s first simplify what is overdraft loan before delving into its specifics.
Overdraft Facility Meaning
An overdraft is a credit facility offered to an individual or company to withdraw an amount greater than the balance in the current/saving account but up to a certain credit limit. Only Pay Interest of Withdraw amount of your credit limit.
For an Example: If you withdraw the some amount & deposited it in 7 days, then you are liable to pay interest of 7 days only.
On the Other hand, A Personal Loan is a fixed amount that is borrowed from the bank for a fixed period of time and has to be repaid in regular monthly instalment.
Interest Calculation
The interest rates on personal loans are variable, calculated on a monthly basis, and are charged on the entire loan amount.
The interest rate on the overdraft facility is calculated on a daily basis and charged on the amount overdrawn from the account. If you do not overdraw any amount, no interest will be charged. Moreover, the interest rate on overdraft is higher as compared to a personal loan.
Eligibility Criteria and Documentations
To apply for a personal overdraft facility loan, you must fulfil the minimum requirements and produce the necessary documentation.
Eligibility Criteria
- Indian nationals or residents who belong to the age group 21 – 58 years.
- The minimum salary required to qualify for a personal overdraft facility for salaried individual is Rs. 30,000.
- Applicants should have two years’ worth of work experience.
- The credit score must be greater than 650.
Both are unsecured facility (Personal Loan & Overdraft Facility)
Please take note that different lenders have different eligibility rules and documentation needs. These could alter depending on the lender’s requirements.
That concludes our discussion on what is overdraft loan facility in personal loans. Unquestionably, taking out a personal loan is also a choice in a financial emergency. To request a personal loan with customizable payback terms, simply visit loanjunction.org Personal loan page.