FLEXI LOAN / OVERDRAFT
Introduction
An overdraft loan or Overdraft Flexi Loan is a short-term loan that allows you to withdraw money from your bank account even if your balance is negative. This means that you can spend more money than you have in your account, up to a certain limit. Overdraft loans are typically offered by banks and credit unions, and they can be a convenient way to cover unexpected expenses.
Overdraft Flexi Loan: Exploring the Basics
An overdraft flexi loan is a type of credit facility that allows borrowers to access funds beyond their available account balance. It provides individuals with the ability to withdraw money up to a pre-approved limit, offering an added layer of financial support in times of need. Unlike traditional loans, overdraft flexi loans are flexible and can be used as needed, with interest charged only on the amount borrowed and for the duration of its utilization.
How Does an Overdraft Flexi Loan Work?
An overdraft flexi loan operates in conjunction with an individual’s bank account, providing an additional borrowing capacity When a borrower exceeds their account balance, the overdraft feature kicks in, covering the shortfall. This allows individuals to make transactions or withdraw money even when their account balance is insufficient. Interest is charged on the overdraft amount utilized, typically at a variable rate, ensuring that borrowers only pay for the funds they actually use.
Benefits of an Overdraft Flexi Loan
1. **Financial Flexibility** : Overdraft flexi loans offer borrowers the freedom to access funds as and when required, allowing for greater financial maneuverability.
2. **Emergency Safety Net** :
With an overdraft flexi loan, individuals can tackle unforeseen expenses or emergencies without the need for additional loan applications or lengthy approval processes.
3. **Cost-Effective** :
Borrowers only pay interest on the amount utilized from the overdraft facility, making it a cost-effective solution for short-term financial needs.
4. **Convenience** :
Overdraft flexi loans are linked to the borrower’s bank account, making it easily accessible for transactions or cash withdrawals.
5. **Revolving Credit** :
The overdraft facility replenishes as the borrowed amount is repaid, offering a revolving line of credit for future needs.