Take advantage of overdraft facility instead of personal loan, know what it is and who can avail it?
Any You may also need money suddenly. If you do not have savings or emergency fund, you have to take a loan. Nowadays banks offer pre-approved loans to their customers. With this, customers can get the loan in a jiffy. But note that personal loan is the loan with the highest interest rate. This may cost you a lot. If you want, you can also avail overdraft facility instead of personal loan. Banks offer overdrafts to their customers. Let us know what is overdraft.
What is overdraft facility?
Overdraft facility is available in both private or government banks. Most banks provide overdraft facility on current account, salary account and fixed deposits, so that customers can use the cash as and when required. This is a kind of loan, which is available from the bank where you have your account. Many banks also provide overdraft facility to their account holders against shares, bonds and insurance policies. With the facility of overdraft, you can take money from the bank when needed and return it later.
How to take overdraft
Some customers already get overdraft facility and some have to take approval from the bank later. Customers can apply for this facility online or by visiting the bank in person. Some banks also charge processing fees from customers in the beginning. Overdraft facility is of two types, secured and unsecured. Secured facility means that before taking money as security, you can avail overdraft facility from the bank by giving shares, bonds, FD, house, insurance policy, salary or mortgage. Whereas, if we talk about unsecured overdraft facility, it is taken when you do not have anything to pledge and are in need of money. In such a situation, money can be taken from the bank without security.
How much money can I get in overdraft?
Every bank has its own rules for this. It entirely depends on what collateral you have given to the bank. Most of the banks give more money for taking overdraft facility in lieu of salary and FD and also keep the limit higher. If your payment history is good then banks give two to three times your salary in overdraft.
interest will be less
Borrowing money through overdraft is cheaper than any credit card or personal loan. In overdraft, you charge less interest than other loans. Also, interest has to be paid on the money borrowed only for the period for which the money is borrowed.
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