Personal loan vs Overdraft: Which One to Choose to Fund Your Financial Needs?

One must borrow wisely now that interest rates are rising. Two of the sought-after options that most take are either a personal loan or an overdraft facility. Most people consider personal loans, which they can now get by calling Indiabulls personal loan customer care when they have urgent financial needs. To prevent liquidating other savings and investments, an overdraft account in a bank can assist in meeting any short-term financial needs.

In the overdraft facility, the bank may allow the borrower to withdraw money in excess of what is available in his or her bank account. The bank establishes the credit limit based on the balance of the account holder. The amount of the overdraft and the length of the overdraft determine the interest rate. Whereas in an Indiabulls personal loan, it is not secured, and the rate of interest depends on your CIBIL score, your repayment capacity, current salary, etc. Let’s discuss both of these options thoroughly to understand which one to opt for next you are in dire need of funds. You could also opt to discuss your other options by calling Indiabulls personal loan customer care. 

Interest rate: In contrast to personal loans, which carry interest starting on the day the money is disbursed, one of the major benefits of an overdraft facility is that it only applies to the amount that is withdrawn. That is, only the amount drawn is subject to interest charges until it is repaid. While the interest component must be paid every month, borrowers have the option to pay the principle component according to their available cash. Due to the higher repayment flexibility, lenders tend to charge higher interest rates than regular personal loans. Most lenders charge fixed interest rates on Indiabulls personal loan, which would remain unchanged irrespective of the changes in the interest rate regime. 

Ease of accessing loan amount: Every time a borrower asks for a personal loan, the lender will review their history and confirm their documentation. You could call Indiabulls personal loan customer care to know if the application is processed. In the event of an overdraft, the paperwork is completed just once, and the borrower is permitted to withdraw funds many times from the same account up to the overdraft-sanctioned amount. Overdraft loans allow borrowers to take multiple withdrawals of any amount from the sanctioned limit, pay back the amount drawn, and borrow again as needed. 

Quick access: You have to deal with a tonne of paperwork when applying for a personal loan. In order to get your loan accepted, you must first have a decent CIBIL score. You will have to go through the same application procedure each time you need money. Additionally, you won’t collect the money until the loan has been approved. You can withdraw money after setting up an overdraft account within a few hours and most probably within one business day. Every time you require cash, you don’t have to constantly open an overdraft account.

Flexibility: Indiabulls personal loan doesn’t provide you with a lot of leeways. For the duration of the term, you must make a fixed Equated Monthly Instalment (EMI), and the payments must be made on time. This could provide a challenge for a lot of people, particularly for those whose monthly income fluctuates. Personal overdraft enables you to withdraw as much cash as necessary up to the predetermined limits. You are free to spread out the payments as you see fit. Whatever works best for you, you can pay within days, weeks, or months.

CIBIL Score Protection: Your CIBIL score would frequently fluctuate if you take out personal loans frequently and repay them. Events like check bounces can lower your score, and if they happen frequently, you can find it difficult to get credit cards or loans in the future. You can stay away from these inconveniences by getting in touch with Indiabulls personal loan customer care for an Overdraft Account. You will only have one loan under the overdraft facility, which you will be paying off on a regular basis, which will benefit your CIBIL score.

Before you set out to avail overdraft, keep the following points in mind:

  • While getting an overdraft facility is faster than getting a personal loan, experts advise being cautious. When using a bank’s pre-approved overdraft account, the user is responsible for monitoring their borrowing and making timely payments. Unchecked borrowing might put you in a debt cycle since the interest keeps accruing.
  • Borrowers who have the ability to repay the loan in full in a relatively short amount of time, such as less than three months, should choose a personal loan overdraft option. Others should stick to standard Indiabulls personal loan termed term loans with fixed terms and EMI.
  • Overdrafts must be compared by interest rate, processing fees, and renewal fees for borrowers. Check the costs against other borrowing options that solve somewhat similar needs. A self-employed person who needs cash flow flexibility may find a loan with an overdraft helpful. 
  • Typically, an overdraft facility is linked to the borrower’s bank account. Only the amount withdrawn from an account is subject to interest charges.
  • Borrowers are permitted to withdraw the sanctioned limit in any amount several times.
  • Before choosing one, compare the interest rates, processing costs, and renewal fees of the overdrafts offered by various banks.


The borrower’s bank account is often tied to the overdraft facility, which enables the borrower to withdraw funds up to a specified limit above the account balance. It is similar to revolving credit, like credit cards, where you can spend up to a certain amount, pay off your debt, and then have your credit limit reinstated. Indiabulls personal loan are less practical than overdrafts. It is best to choose an overdraft account if there is a chance that you might require many personal loans. But if you’re only aiming for one loan with a higher principal amount and are ready to pay it back over a longer term, then you should consider a personal loan. The overdraft facility is best suited for those facing frequent short-term cash flow. 

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