Overdraft Facility
Whenever we make a choice for the best bank in town, we focus on the facilities it offers. The one that stands out in owing facilities wins the best bank award.
Out of those facilities, we have Flexi personal loans and overdraft loan facilities that help in managing finance like never before.
It has no connections with general loans that are packed with higher interest rates. All it takes is documentation that states the excess funds you can withdraw.
What exactly a personal overdraft facility is, how it works and what are the type of overdraft facilities out there; here’s everything explained in detail:
What is a Personal Overdraft Facility?
It is simply a financial instrument to help you ease your debts and get your finances back on track.
That facility is connected with your bank account and an account holder can withdraw funds in excess of the balance from their accounts; according to the limit set by the bank.
That limit was traditionally granted by the bank based on these two factors:
Account value
Creditworthiness
It works for both; current and business accounts and every bank account can have different limits for the facility. Various lenders and financial companies now offer an overdraft facility for salaried professionals which is referred to as overdraft for salaried.
Here’s an example to understand what exactly a personal overdraft facility is:
Many banks can offer a credit line of up to 10 Lacs from which an account holder can request ₹ withdrawal of any amount (in 10,000 multiples only). This facility then helps customers assist with your immediate financial needs (i.e., utility bills) for which your liquid funds may be insufficient.
How does Overdraft Facility work?
Overdraft is just another form of loan wherein you have to pay interest only if you use the facility.
Additionally, the interest will only be charged on the utilized amount for the period you borrow the funds.
For instance, if you are eligible to have an overdraft facility of INR 1,00,000 and you go for INR 30,000 from that; you are liable to pay interest only on INR 30,000 and not on the entire sum (INR 1,00,000).
It was traditionally extended to businesses that needed working capital to meet their cash flow. It has now transformed into an overdraft loan and is now even available for a salaried professional with products like a personal overdraft or overdraft for salaried. A minimal processing fee of 2% (or less) is charged on the gross loan amount that is sanctioned to you. The issuing authority typically gives the customer or account holder the right to discontinue this facility (Flexi personal loan) anytime to have no processing fees later on.
Final Verdict - Overdraft loan
That’s all about the overdraft facility and the pattern it works. For professionals, we have overdraft for salaried that has nominal processing fees than usual. The Flexi personal loan is another name for the facility, you just require a good credit score and a written statement from your bank to withdraw excess cash anytime you require; helping you with your finances on the go!