8 Things To Know About Overdraft & Personal Loans

Meghna Maiti


Banks extend customers a credit line to allow them to withdraw funds more than their account balance.


Personal Loan

Loans offered by banks and other financial institutions in a lump sum are called personal loans. 


Loan Processing

Customers must submit an application and other documents for a personal loan, while overdrafts allow for withdrawal at any time. 

Quick and Repetative

Interest Rate

Personal loans have a predetermined interest rate once sanctioned; overdraft facilities charge interest when funds are withdrawn.

Rate of Interest

Credit Limit

Personal loans have a fixed amount, while overdrafts allow for varying withdrawals based on individual needs.

Fixed amount of credit


Personal loan repayment tenures can last up to seven years, while an overdraft facility typically lasts a fortnight or a month.

Duration to return the borrowings


An overdraft facility is more flexible as it is at the account holder’s discretion; personal loans are paid through fixed EMIs. 

Mode to Re-Pay The Loan

Prepayment Charges

A personal loan has a prepayment charge, while overdraft facilities usually do not have prepayment charges.

Compiled By Himani Verma

Prepayment charge