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Overdraft Loan Vs Personal Loan
| OVERDRAFT | PERSONAL LOAN | |
|---|---|---|
| DEFINITION or FLEXIBILITY | An overdraft is a credit facility offered to an individual or company to withdraw an amount greater than the balance in the current account but up to a certain credit limit. | A personal loan is a fixed amount that is borrowed from the bank for a fixed period of time and has to be repaid in regular monthly instalments(EMI). |
| INTEREST CALCULATIONS | The interest rate on the overdraft facility is calculated on a daily basis and charged on the amount overdrawn from the account. If you do not overdraw any amount, no interest will be charged.Moreover, the interest rate on overdraft is higher as compared to a personal loan. | The interest rates on personal loans are variable, calculated on a monthly basis, and are charged on the entire loan amount. |
| SPEED OF DISBURSAL | Overdraft funds are available within a few hours or may take up to a day. | The personal loan follows a process that involves checking the eligibility, submitting the documents, vetting, verification and then approval. The process can take a few hours to a few days. |
| REPAYMENTS | The repayments of the funds taken from the overdraft facility have to be done through bank deposits in the account. | On other hand personal loan is repaid to the bank through easy monthly EMIs, usually via direct debit. You can determine your EMI amount with the help of an EMI CALCULATOR. |
| PART PAY CHARGES & MODE OF PAYMENTS | No Charges applicable for making part payment can be done through portal or respective mobile application. | Charges applicable for making part payments. |
| TRANSACTION RESTRICTIONS | NONE | NONE, Except Minimum amount should be 3 times the EMI amount. |
| DETAILS | BAJAJ FINSERV | TATA CAPITAL | KOTAK | ADITYA BIRLA | AXIX FINANCE |
|---|---|---|---|---|---|
| ROI(RATE OF INTEREST) | 13.5-15.0% | 13.50% on words | 13.5-15.0% | 14.0-17.0% | 13.0-17.0% |
| TENURE(YEARS) | 2+7 | 2+5 | 1+4 | 0+7 | 0+6/7 |
| PROCESSING FEE(PF) | 0.25-1.0% | 0.5-2.0% | 0.5-2.0% | 1.0-2.0% | 1.0-2.5% |
| INSURANCE | NIL | 1% | 1% | 1% | 1% |
| ANNUAL MAINTENANCE CHARGE(AMC) |
0.30% | 0.25% | NIL | 0.25% | NIL |
| FINANCIAL FITNESS REPORT(FFR) |
5999 | NIL | NIL | NIL | NIL |
| FLEXI FEE | 7999 | NIL | NIL | NIL | NIL |
| ELIGIBILITY CRITERIA | AGE | You have to be at least 21 years. | |||
| BANK ACCOUNT | You must have a bank account. | ||||
| Income Criteria | This varies from one lender to another. However, note that lenders prefer you to be employed in a reputed organization. | ||||
| Good CIBIL or Credit Score | Although a good CIBIL score is not a crucial factor for availing an overdraft facility, it is considered an added advantage. | ||||
| Business vintage | This factor also varies from one bank to another. However, banks prefer a self-employed applicant who has been running a profitable business for many years. | ||||
| REQUIRED DOCUMENTS | PROOF OF IDENTITY | Passport photo, PAN card, Aadhar card, Voter ID card, and Driving License. | |||
| PROOF OF RESIDENCE | Electricity bill, Gas bill, postpaid bill, rent agreement, water bill. | ||||
| SALARY SLIP | Last 3 months salary slips are required. | ||||
| BANKING | Last 6 months bank statements are required. | ||||
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