Overdraft Limit

Overdraft is extended to customers as per a predetermined limit which can vary from one customer to another.

The interest rate is calculated on a daily basis and is billed to the account when the month ends. If you default on repaying the overdraft as decided, the interest is added to the principal at month-end. From then on, interest is calculated on this new principal amount.

 While you do have to pay a prepayment charge while repaying any loan, this is not the case with Overdraft Facility. Along with the zero-repayment charge, you can repay the overdraft amount in a lump sum manner without relying on EMIs.

With an Overdraft Facility, you can repay the borrowed money whenever you have funds. You do not have to repay via EMIs and can pay off any amount you like. However, if the lender demands a repayment, you will have to meet their requirements.

Again, there is no minimum monthly payment associated with overdraft. However, the amount you borrow must fall within your sanctioned limit. Also, try not to delay your overdraft repayment for long durations as it can negatively impact your credit score.

You can avail of an Overdraft Facility jointly with a co-applicant. However, both of you will be responsible for the entire debt and the timely repayment. If one borrower defaults during repayment, then the other borrower will have to shoulder the entire amount. Plus, all collaterals of each of the borrowers are equally at stake in case of default, regardless of their overdraft proportion.