An overdraft facility is issued by the lender through an applicant and can take a certain amount when the account balance reaches zero. The lenders charge interest on the borrowed amount. It is the best component to have on a business loan as it lets an applicant cover the loss in the cash flow. The overdraft facility is provided by mostly every bank, financial institution, or NBFCs. It is a short-term loan that has to be payback in a specific period set by the banks. It works as additional credit offered by the lenders. Any holders with savings and current accounts should opt for an overdraft facility because this facility helps to withdraw money even when an account reaches zero.
The interest rate for bank overdraft facility is 9.00% onwards.
|Bank name||Interest rates||Processing fee|
|State bank of India||8.45%||1%|
|Yes Bank Ltd.||8.00%||1%|
|Bank of India||8.35%||1%|
|Kotak Mahindra Bank||7.25%||1%|
|Punjab National Bank||8.70%||1%|
|United bank of India||10.75%||1%|
|South Indian Bank Ltd.||10.70%||1%|
|RBL Bank Ltd.||8.50%||1%|
|Union bank of India||9.80%||1%|
|Bank of Baroda||9.00%||1%|
|Central Bank of India||10.10%||1%|
|HDFC Bank Ltd||7.25%||1%|
|ICICI Bank Ltd.||7.75%||1%|
|IDFC First Bank||9.50%||1%|
Eligibility for an overdraft facility depends on several factors such as business turnover, age of an applicant, monthly salary, creditworthiness, repayment history, total work experience, etc.
Given below are the documents that are required for applying for a Bank Overdraft facility:
EMI or Equated Monthly Installment is a set of amounts that are paid by an applicant to the lender every month.
EMI = PV×i×[(1+i)n(1+i)n?1]
Where, i = Rate of Interest
PV = Loan amount
n = Tenure (years or months)
An applicant can take a loan of Rs. 40 lakhs for 17 years at an interest rate of 10% p.a. then, what will be the EMI?
|Rate of interest||10%|
|Tenure (in no. of months)||204|
Hence, knowing the facts about bank overdraft facilities, compare interest rates by Top banks to get the best deal for the loan. Apply through financeseva.