What Is The Difference Between Loan And Overdraft?

Lending institutions in India bring a host of financial products to help meet individuals meet their monetary needs. Loan Against Property and overdraft loan are two such products designed for the convenience of borrowers.
 

Understanding A Loan Against Property And An Overdraft

A loan against property is one of the preferred secured loans sanctioned against collateral.

  • You can mortgage a piece of land, residential, commercial or industrial property, etc.
  • The fund availed is disbursed wholly to your account post approval.
  • Utilise the fund for any purpose, from business marketing and advertising to higher education of your child.

An overdraft is also a type of loan but with different features. The main difference between Loan Against Property and overdraft facility lies in their repayment structure.

  • With this facility, you can make multiple withdrawals as and when required from the loan amount available to you.

You can apply for both these financing options via simple eligibility criteria and minimal loan against property documents.

Bajaj Finserv offers a similar feature in the form of Flexi Loan facility. It makes your repayment easier through interest-only EMIs and can reduce your monthly outflow towards the loan by 45%.

Also Read: Loan Against Property without ITR

Some of the Noteworthy Differences

Loan Against Property Flexi Loan facility
Interest rate is charged on the total principal. Interest rate is charged only on the amount withdrawn and not on the entire principal.
The rate of interest calculation is on a monthly basis. A Property Loan availed on Flexi Loan facility accrues interest rates on a per day basis.
EMIs you pay consist of both principal and interest payable. You can opt to pay the interests only as EMIs.
Repayments are made via easy EMIs throughout the tenor. Repay the principal when you have surplus funds or at the end of the tenor.

While a mortgage loan is appropriate to meet larger financial requirements such as debt consolidation, medical expenses, etc., a Flexi Loan facility proves beneficial when you need small funds frequently. For example – boost your working capital, meet the additional expenditures of a wedding, etc. So, choose between a Loan Against Property and a Flexi Loan facility as per your convenience and read how to apply for loan with Bajaj Finserv.