What is overdraft loan?

I have recently taken an advantage of the overdraft (OD) facility of my bank to fulfill some commitments, so I can tell you what an OD loan means. An overdraft is a credit feature provided by public and private sector banks that allows you to withdraw an amount as per your needs. You can repay the withdrawn amount at your convenience. You will be charged the interest rate is charged only on the use amount from the total sanctioned limit.

Now you know what is overdraft loan.

• Overdraft account is a facility that you can avail by maintaining any bank account

• Many private sector banks are now providing this facility for both savings and salary account holders

• The money extension is granted based on the credit score, repayment history, or account value of the customer.

• It’s short-term credit offered by the bank that you have to repay within a specified time limit.

• As per the Reserve Bank of India’s regulations, cash credit accounts and current accounts are eligible for a maximum of Rs. 50000 per week

• Age Criteria: Maximum age is of 65 years and the mininmum age is of 21 years

• Bank Account: You need to have an existing bank account with the respective bank

• Income Criteria: Varies from one bank to another

• Good credit or CIBIL score would be an added advantage

• Application form

• Passport-sized photographs

• Identity Proof (Driving License, PAN card, Passport, Voter ID card, and Aadhar card)

• Address Proof (Voter ID card, Driving License, Passport, and Utility Bills)

• Age Proof (Class X certificate, Passport, etc.)

• Bank statement for the last 12 months

• Other documents needed by the lender

The interest rates vary from one bank to another and depend on the applicant’s profile and their relationship with the bank.

This is all on what is OD loan.

This simple home loan eligibility calculator will help you check your eligibility for the home loan:

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Now you know everything about the OD loan means.