Personal Loan vs Overdraft Account
One of the main dilemmas an individual faces when in need of instant funds is over Personal Loan vs Overdraft Account. A personal loan is a type of loan where the borrower is not required to keep any collateral as security. 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 on Personal Loan vs Overdraft Account:
Instant Fund: If you’re about to take a personal loan, you have to deal with minimal documentation. To avail of a personal loan, your income proof, and the CIBIL score, both are essential. After setting up an Overdraft Account you’ll be able to get money within a couple of hours. You need not 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 take funds 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: Personal Loan Interest Rates are fixed based on the profile as well as the stability of income and are generally higher than other types of loans. In case you pay the loan amount before the given time, you will have to pay prepayment fees as well including principal and interest amount due till that time. In the Overdraft option, you only pay interest on the 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 go for an Overdraft account, you won’t see the same obstacles as you see in personal loans. Under this facility, there’s only one loan that you’re servicing daily. This option may increase your CIBIL score.
To know more about different types of personal loans, visit DialaBank.
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