What is overdraft loan in India? Types of Overdraft Loan
Good times are when people make debts to pay in bad times.”
The overdraft loan is a type of loan in which the account holder can withdraw the money more than they have in the account by the bank. The loan amount is limited. In this type of loan the money can be withdrawn whenever needed by the account holder.
BENEFITS OF OVERDRAFT LOANS
- The first benefit of overdraft loans is that you can withdraw or invest money whenever you need it.
- You do not have to face the approval process for this loan.
- Whenever you come in any emergency situation or necessarily need money then you can use the money from the overdraft loan.
- You only have to repay for the interest rate only and if the interest rate decreases then you do not have to pay for it.
- In the overdraft loan you do not have to pay the monthly installments of the loan amount.
APPLY FOR OVERDRAFT LOANS
- Go to the bank branch from where you want the overdraft loan.
- Give you bank account details and get an application form.
- Fill up the application form and agreement letter.
- Submit the form and agreement letter to the bank.
- The bank will approve your former and latter.
- The overdraft amount will be transferred to your bank account or overdraft account.
DOCUMENTS REQUIRED FOR OVERDRAFT LOANS
- The identity proof of the borrower such as aadhar card, passport, licence, etc are required.
- The address proof of the residential address of the applicant is necessary.
- Income proof is needed like profit and loss slips,account details and statements, etc.
- Age proof of the borrower is needed.
- The loan repayment track of the borrower is required.
- Passport size photographs.
ELIGIBILITY FOR OVERDRAFT LOANS
- Age criteria is 22 years to 58 years of age.
- Clear records of repayments of the loan amounts.
- The bank statement of the last twelve months.
- Employment proof of at least two years.
- Indian citizenship.
INTEREST RATES OF OVERDRAFT LOANS
The interest rates for the loan amount up to Rs.75 lakhs is 8.70% to 9.0% per annum for the salaried borrower. For the non salaried borrower the interest rate is 9.05% to 9.15% per annum on the loan amount Rs.75 lakhs.
DISADVANTAGES OF OVERDRAFT LOANS
- The loan amount in the overdraft loan is less than the money in the personal loan.
- The interest rates of the overdraft loans can be very high.
- The fees of the overdraft is also higher than the other loans.
- The repayment of the loan amount is a tough process.
- Interest rates should be paid in less time in the overdraft loan.
BANKS THAT PROVIDE OVERDRAFT LOANS AFTER COVID-19 PANDEMIC
|Central Bank of India||HDFC Bank|
|Indusand Bank||TATA Capital Bank|
|Bank of Baroda||Allahbad Bank|
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