Personal Loan v/s Overdraft Account Which is Better?
Most leading banks and financial institutions offer instant consumer loan online and overdraft facilities to their customers with varying terms and conditions. Typically, customers are more conscious of mastercard facilities and private loans than overdrafts. Overdrafts are mainly employed by corporate clients or high net-worth (HNI) clients.This article compares personal loans and overdraft accounts to assist you opt the proper option. to understand more how personal loans can work for you, read this text here.
What is an overdraft account?
overdraft facility doesn’t have a grace period and therefore the interest becomes applicable right from the day of the borrowing itself.
What is a private loan?
Personal loans are unsecured loans that don’t require you to pledge collateral as security. they will be obtained to satisfy personal expenses like funding your child’s education, taking a world vacation, renovating your house, and so on. These loans require income verification and are supported your credit history. the higher your credit score, the upper the loan amount you’ll avail. Application for private loans is sort of simple and usually gets approved within a couple of days.
How are personal loans and overdraft different?
When you avail an overdraft facility, you’re not required to pay interest until you really withdraw the quantity from your account. Moreover, the interest is merely charged on the particular amount you employ and not on the whole limit, like during a mastercard .For example, you’ve got an approved overdraft limit of Rs. 1 lakh, but you withdraw only Rs. 50,000. In such a case, the interest is levied on Rs.50,000 and not the whole sum of Rs.1 lakh.
Compared to non-public loans, the interest rates applicable to overdraft are often higher. you’ll repay the borrowed amount over a hard and fast period of your time . just in case you would like to repay the whole amount, you’ll exercise that option without incurring any pre-closure charges.
- Personal loans
When you apply for a private loan, it gets approved instantly, provided you meet eligibility requirements and have the required documentation in situ . the cash can get credited in your checking account within a couple of hours. Once this money is disbursed, interest is levied immediately on the whole amount.
For example, if you avail a private loan of Rs.1 lakh, whether you employ the loan amount or not, you’re required to pay interest on the whole sum until you repay the loan.
Which one is better?
An overdraft are often wont to deal with short-term financial requirements. Even with an overdraft facility one may require more funds or time to repay. during this case, personal loans are a superb option. you’ll convert your overdraft into a private loan for extra funds and a extended repayment tenure.
If you’re in need of monetary assistance, you’ll avail a moment consumer loan online from Bajaj Finserv. The loans carry lower consumer loan interest rates and also involve minimal documentation. The loan disbursal process is extremely fast and efficient. you’ll get the cash in your checking account within 24 hours of loan’s approval. think about using the private loan EMI calculator on the Bajaj Finserv website to work out your monthly payments and sketch your finances.
Additionally, there are many other pre-approved offers on personal loans, business loans, home loans, and a number of other financial products. These offers can make the processing of loans simpler and also assist you save on time. you’ll simply share a couple of basic details and inspect your pre-approved offer.