Скачать или смотреть Better option than Personal Loan

To put it simply, in overdraft facility if you have an approved credit limit of ₹ 1,00,000 and you wish to use only Rs 30,000, you withdraw Rs 30,000 and pay interest on monthly basis only on the withdrawn amount.

➡️Generally the Rate of Interest in OD is 1%-2% higher than Personal loan, but will be charged only on the withdrawn amount. So it can become significantly lower if you utilise only the necessary required amount.

🔸An overdraft facility in bank accounts is like a pre-approved loan. The bank ascertains a specific limit up to which you can overdraw on your account balance.

🔸The bank charges interest only on the amount used by you and only for the time it is borrowed. It is calculated daily and billed to you every month.

🔸You can pay back the amount as and when you have the funds, as a lump sum or in part-payment, and there is no prepayment penalty or EMI concept like in loans.

Difference between Overdraft and Personal Loan Account.

🔺A personal loan is a loan, but an overdraft account is a line of credit. Hence, the most essential difference is the terms of repayment. An overdraft doesn't involve EMls or have foreclosure charges like a personal loan and is more flexible.

🔺The interest in a personal loan is charged on the entire loan amount, but only the amount actually overdrawn is charged in an overdraft account.

Source: Groww, loantap
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