Personal Loan vs. Overdraft Account: Which is better?by Ajay Singh Financial Advisor
When you need fund, your bank will always suggest you some ways to get your account credited with the fund. It can be an easy instant personal loan or an overdraft amount. Both have their perks and benefits, and you will have to choose the best road that gives you the best benefits. It is easy to get both, like a personal loan and overdraft amount are not new terms. People find instant personal loan more easy and convenient, but it is an unsecured form of loan that you go for. There is no need for any collateral or security to keep if you are going for a personal loan. If you are confused between both, you need to know every small aspect about them and then make a decision.
If you are aware of the benefits and issues, then you can go ahead and choose the right form of a loan. It will give you the right approach and you will find the right escape to loan. It will be instant, and some knowledge is always important to choose the right one.
What is a personal loan?
An instant personal loan is a quick loan that is easy to get and very affordable. You get the best rate of interest if you compare a personal loan with any other type of loan. It will help you get instant cash in your account that you can use for anything because there will be no rigidity in the end-use facility. It is your money and no one is asking you the end-use for borrowing. You can pay off the debt in an easy repayment scheme as per the tenure you choose. There is no need to give away any security or collateral with the bank as it is an unsecured form of debt.
What is an overdraft amount?
In an overdraft amount, you can borrow a certain sum of money front the current account of the bank. There is a limit as to how much you can withdraw for usage. It is done quickly and the process will not make you wait for a long period. Within some hours you can withdraw and use the amount for any need that comes up.
Difference between a personal loan and overdraft amount
- Period of Disbursement: In a personal loan the disbursement is always quick. From the time of application to disbursement you can get the fund in your account within some hours. If you are going for an instant personal loan, you will get the disbursement within few hours. You will have to do your documentation and then apply for a loan every time you need the fund. However, in the overdraft amount, the disbursement is done within few hours and one business day. You don’t need to apply every time you need the fund. If you need the fund you can withdraw it from the current account.
- Repayment scheme: In a personal loan there will be a fixed EMI scheme every month. You need to go for a fixed installment that you need to pay. Here you need to select a specific tenure and you need to pay the fixed EMI monthly without any changes. However, in an overdraft amount you don’t need to go for any fixed tenure or pay any fixed EMI on monthly basis. You can go for repayment according to your wish.
Keep your personal loan documents in place when you are looking for an online loan. It will help you with a faster loan process.
Created on Mar 16th 2021 05:56. Viewed 205 times.