Avail overdraft facility instead of personal loan, know what it is and who can avail it?

Some customers get overdraft facility in advance and some have to take approval from the bank later. Customers can apply for this facility online or by visiting the bank in person. Some banks also charge processing fees from customers initially. There are two types of overdraft facilities, secured and unsecured. Secure facility means that before taking money as security, you can get overdraft facility from the bank by giving shares, bonds, FD, house, insurance policy, salary or mortgage.

Whereas, if we talk about unsecured overdraft facility, it is taken when you have nothing to pledge and need money. In such a situation, money can be withdrawn from the bank even without security.

How much money can I get in overdraft?

Every bank has its own rules for this. It entirely depends on what guarantees you have given to the bank. Most banks offer more money to avail overdraft facility against salary and FD and also keep the limit higher. If your payment history is good then banks give you two to three times your salary in overdraft.

Borrowing money through overdraft is cheaper than any credit card or personal loan.

In overdraft you charge less interest than other loans. Also, interest on borrowed money has to be paid only for the period for which the money is borrowed.