Personal Loan vs. Overdraft Account
When you’re looking for an instant fund then there are two options you can terminate your search. You can choose a Personal Loan or you have an option of an overdraft facility as well. When it comes to availing a personal loan then the loan is an unsecured loan in which you no need to keep any collateral. If we talk about choosing an overdraft facility, you can get cash via the bank’s current account. There’s an upper limit to cash you can pull out. Check out the differences between an overdraft account and a personal loan:
Faster Funds Release and Simplicity
Instant Fund: If you’re about to take a personal loan, you have to deal with minimal documentation. To avail a personal loan, your income proof and CIBIL, both are essential. Have to follow the same procedure every time you need money and you may get fund once it gets approved by the bank. After setting up an Overdraft Account you’ll be able to get money within a couple of hours. You no need to go through the repetitive procedure.
Flexibility: In a personal loan, you have to pay fixed monthly payments on time. Once the bank detects any fault in your EMIs, it will affect your credit history. When it comes to Personal Overdraft then it permits you to to take fund according to your needs. As per your convenience, you can spread out the repayment. Whatever suits, you can pay accordingly (weekly or monthly etc.).
Interest: After availing a personal loan, the interest begins to accumulate quickly. In case you pay the loan amount before given time, you will have to pay prepayment fees as well including principal and interest amount due till that time. In Overdraft option, you only pay interest on money you use. If you pay entire fund at once, there won’t be an issue and you don’t have to pay any additional fees,
CIBIL Score Protection: If you’re that type of applicant who regularly avails a personal loan and repays them, then it would affect your CIBIL score. Events such as cheque bounce can also affect your score. Bad credit score will create an obstacle in availing a personal loan in the future. If you g for an Overdraft account, you won’t see the same obstacles as you see in personal loan. Under this facility, there’s only one loan which you’re daily servicing. This option may increase your CIBIL score.