If you are looking for a short-term borrowing option to access quick funds, look no further than a personal loan overdraft facility. An overdraft facility is an instrument by which your bank extends credit to you when your account balance reaches zero. Unlike an instant personal loan, it allows you to pay interest only on the amount that you withdraw. However, the interest rates are slightly higher than personal loan interest rates since the tenure is shorter.
Banks/NBFCs offer overdraft facility to its customers, usually at interest rates starting at around 13%. The loan tenure is usually between 1 year and 5 years. You can get an overdraft from Rs. 2 lakh to Rs. 25 lakh, depending on several factors like credit score, monthly income, and account balance.
Although most financial institutions have different eligibility criteria for an overdraft facility, it isn’t drastically so. For a quick reference, here are the basic eligibility criteria for personal loan overdraft facility:
- You must fall in the age bracket of 22 and 58 years
- Your monthly income must be at least Rs. 35,000
- You should be working in the same company for a minimum of six months
- You must have work experience of at least two years
The documentation required is also minimal. To apply for personal loan overdraft facility, you need to submit the following documents:
- Residence proof
- Identity proof like Aadhaar Card
- A copy of the Voter ID Card/Passport/Driving License
- Copies of bank statements for the last three months
- Copies of salary slips for the last three months
Additional Read: What is the Difference between Personal Loan and Personal Loan Overdraft?
Advantages of overdraft facility:
- As stated above, the documentation process is very minimal
- You pay interest only on the utilized amount. Also, part-payment facility is available without any additional charges being levied
- You can withdraw and repay any number of times as long as the amount is within the approved limit
You receive the requested overdraft amount in a way similar to how a loan amount is disbursed. With a pre-approved overdraft, you can withdraw funds from the bank as needed. The amount goes into your overdraft. The interest charged by the bank is levied from the time the money is borrowed to when it is repaid.
It is your choice to repay the money to the lender in full or in part. Additionally, you can again withdraw money from the account if a need arises until you reach the sanctioned limit of the overdraft.
If you need a short-term loan without the burden of a monthly EMI running for years, you should apply for personal loan overdraft facility. Tata Capital offers overdraft loans of up to Rs. 25 lakh with flexible repayment options and efficient service and support. Visit the Tata Capital website and explore more borrowing options to ease your financial worries.