Many times there comes a time when you are in dire need of money and in such a situation, you also get disappointment from friends and relatives. If this has ever happened to you, then now you do not need to worry. One should take advantage of the overdraft facility provided by banks in bad times.
Many times there comes a time when you are in dire need of money and in such a situation, you also get disappointment from friends and relatives. If this has ever happened to you, then now you do not need to worry. One should take advantage of the overdraft facility provided by banks in bad times. The overdraft facility of banks is similar to taking a loan, but in this you have to pay a lump sum amount, not in installments.
Right to sell property for recovery
Not only this, banks provide overdraft facility without security and guarantee. However, some overdrafts are also given with security and guarantee, which is called Secured Overdraft. In such a situation, the lending bank can sell your properties for recovery, so that the bank does not suffer.
Features of overdraft
1. Limit
The overdraft limit or limit may vary from customer to customer. It is decided based on the relationship with the customer’s bank.
2. No EMI payment
You cannot repay the overdraft in installments like a loan. You have to make this payment together in cash. You can pay your overdraft amount whenever you want. But keep in mind that if the bank has asked you for payment, then you will have to pay soon.
3. No Minimum Monthly Payment
In this facility, you are not given a minimum monthly payment limit. But still you should pay the overdraft on time, so that your credit score should not be affected.
4.Interest Rates
In this, interest is charged on the overdraft amount utilized and not on the total overdraft limit. It is calculated on a daily basis and billed at the end of the month. If you pay every month and default on any month, the interest amount is added on the principal amount withdrawn at the end of the month. After that interest will be added on this amount.
5. Pre-payment charge
When you take a loan from banks, a prepayment charge is levied, but this is not the case in an overdraft. You can make its full payment at once whenever you want.
6. Joint Overdraft
If you want, you can also take a joint overdraft. In this, the co-applicant also has full responsibility for the payment. Even though the amount is in the use of only one person, but the responsibility will be considered complete of both the applicants. If the repayment is not done then the guarantee given to the banks is at stake.
