Personal Overdraft
In times of financial need, people often turn to borrowing options to fulfill their immediate cash requirements. While payday loans have been a popular choice for many, personal overdrafts offer distinct advantages that make them a better alternative. This article explores five compelling reasons why a personal overdraft is a preferable option over payday loans.
How would you feel if you had an all-weather friend from whom you could borrow money whenever necessary? So now you can have one. With the Personal Overdraft feature, you can obtain credit on the fly and repay it whenever it is convenient for you. There is no need for cumbersome procedures or paperwork. Disbursements take a few business hours after your Overdraft Account is set up.
Even though a Payday or Advance Salary Loan looks to be a good option a Personal Overdraft is better in many ways.
Here are the reasons why Personal Overdraft is a better option than Payday Loans:
1) No Limitations
Payday Loan are short-term loans that can be used for smaller loan amounts. Generally, the tenure allowed for Payday Loans is also shorter – between 5 to 60 days. The maximum loan amount is also Rs. 30,000 to Rs. 40,000. However, when it comes to Personal Overdraft, then the tenure could be as long as 60 months. You can also request for higher withdrawal limits on your account, which can easily cross the Rs. 50,000 figure.
There is no benefit in a Payday Loan when it comes to limits, especially when you have a better alternative, i.e. Personal Overdraft. After all, in the hour of need, when you require money, you don’t want to restrict yourself to a limit, either on the amount or the duration of the loan.
Payday loans are designed to be repaid in a short period, usually within a few weeks or a month. This short repayment term can put immense pressure on borrowers, especially if they are already facing financial difficulties. In contrast, personal overdrafts provide a longer repayment period, giving borrowers more time to repay the borrowed amount. This extended timeframe allows individuals to manage their repayments more comfortably and reduces the likelihood of falling into a debt trap.
2) Lower Interest Rates
Payday Loans generally have very high interest rates upwards of 30 percent. Some companies will charge you as much as 50 percent. The rules associated with them are also quite unforgiving. For instance, if you fail to pay the loan within the tenure then the penalty can be significant. Personal Overdraft, on the other hand, is easier on your pocket, and its interest rates are also affordable.
One major advantage that Personal Overdraft (PO) has over Payday Loans is its basic structure. Imagine you recently moved to a new city, and to purchase the furniture for your new home you took a Payday Loan. However, your better half has to go out of the city for some work, and now you can’t spend the money until they come back. All this time interest is being accumulated on money which is of no use to you yet. However, if you had Personal Overdraft facility, then you wouldn’t have to pay for the additional interest. You could have withdrawn money exactly when you needed it.
One of the primary reasons why a personal overdraft is better than a payday loan is the difference in interest rates. Payday loans typically come with exorbitantly high interest rates, often exceeding 400% APR. On the other hand, personal overdrafts generally have significantly lower interest rates, making them a more affordable borrowing option. By choosing a personal overdraft, borrowers can save a substantial amount of money on interest payments, reducing the overall cost of borrowing.
3) Employment Criteria
You have to be working full time to avail a Payday Loan. If you are working part-time or are self-employed, then you may not be eligible for it. However, you can apply for Personal Overdraft irrespective of the nature of your employment.
Opting for a personal overdraft instead of a payday loan can have a positive impact on one’s credit score. Payday loans are often not reported to credit bureaus, which means they do not contribute to building a borrower’s credit history. On the other hand, personal overdrafts are generally reported to credit bureaus, providing an opportunity for borrowers to demonstrate responsible borrowing behavior. By making timely repayments and managing the overdraft effectively, individuals can improve their credit score, leading to better borrowing options in the future.
4) Flexibility
If you are looking for flexibility in a Payday Loan, then you will be disappointed. When you get a Payday Loan, you have to pay it within a short term, along with fixed fees and interest. If you delay the payment by even a day, the lender slaps a fee. Needless to say, you are pretty much on the edge in this kind of arrangement.
If a Payday Loan is like a stiff landlord who is always breathing down your neck, waiting for the rent, then Personal Overdraft is like your best friend. Just like your friend gives you money and forgets about it, Personal Overdraft never puts pressure on you for repayment. You can pay back as per your convenience, in partial payments too, if you like.
Personal overdrafts offer more flexible repayment options compared to payday loans. With a personal overdraft, borrowers have the freedom to repay the borrowed amount at their convenience, within the agreed-upon credit limit. They can choose to repay the full amount in one go or make smaller, manageable payments over time. This flexibility allows borrowers to align their repayments with their financial situation and cash flow, reducing the risk of falling into a debt cycle.
5) Quick Access, and Faster Disbursal
When almost everything is available on the Internet, why should you go to a financial institution to get a loan? Well, you don’t have to if you have Personal Overdraft facility. In fact, you don’t even have to leave your house. All you need to have is a computer or a phone with Internet access. LoanTap offers Personal Overdraft facility that you can apply for, from anywhere. All you have to do is provide some basic details online, and a representative will visit you for the verification of some documents. Once all this is done and taken care of, the funds are released within 24 hours. It doesn’t get any easier than this.
What are Some Situations Where Personal Overdraft is Useful?
Even if you don’t have an immediate need for Personal Overdraft facility, there in no harm in availing the same. It can be incredibly useful at times when you least expect a crisis. Here are some situations where Personal Overdraft can be a life saver:
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Emergencies: In an emergency, when you need a lot of cash, you can’t depend on a bank for a loan. With Personal Overdraft you can withdraw money anytime you want and handle an emergency without any problem.
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Cash Bouncing: With overdraft facility, the cheques signed by you won’t bounce even when the funds are insufficient. This will help in preventing your CIBIL score from damage.
How Can I Apply for Personal Overdraft Facility?
To apply for a Personal Overdraft service, you must supply some basic information such as years of employment, EMI outflow, rent overflow, and upload specific papers online. This also provides an estimate of your loan eligibility. If you are eligible for a personal overdraft, you can schedule an appointment with a LoanTap representative. During the visit, you must produce signed documents for verification. Once built, the facility is operational within 24 hours.
Technology has altered our world in numerous ways. The Internet, in particular, has altered the way we shop, study, learn, and even enjoy entertainment. Banking has also changed and improved correspondingly. Today, you can apply for loans from the comfort of your own home, and Personal Overdraft is one such online service that can be extremely beneficial to you. Nobody can predict when they will need large sums of money in a short period of time, but if you have a Personal Overdraft facility, you won’t have to worry about it.
