Lending for interest is a popular business form of banks and financial institutions in general. You must have heard of some types of loans such as unsecured loans, mortgage loans, credit card loans, overdraft loans. So what is an overdraft loan? Is this form of loan different from other forms of loan? Find out all you need to know about this instant funding!
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What is an overdraft
?The term “overdraft” refers to the practice of a credit institution approving in writing that its customers using its debit card can spend in excess of the amount when the card has an account of 0.
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The bank will give you a limit that allows you to borrow overdraft. This limit supply is relatively high, can be equal to 5 times your monthly salary, and can be up to 100 million VND.
The current need for overdraft loans
Overdraft is not a new form of loan, but not many people know it. Let’s put the case you need an urgent money at the end of the month but can’t turn it right away, what to do? The fastest way is to ask a relative. But if your loved one does not have an overdraft loan, you can think of an overdraft loan.
The limit for you to borrow overdraft is also quite diverse, usually the amount is quite large. However, along with that, the accompanying interest rate is not small. Therefore, users tend to borrow overdraft only about once a year in situations where they need money urgently.
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What are the conditions for an overdraft loan
?There is no unified regulation on conditions for allowing overdraft loans in commercial joint stock banks today. Each bank will have different regulations. In general, as long as you have a stable job and income paid through a bank card every month, you are eligible for an overdraft loan. Particularly in the case of Timo digital bank, it is more special, if you are a Timo member (with a Timo Debit card) for more than 6 months, you can completely access the Timo Fast Cash program with the loan feature. Fast and convenient overdraft.
Some features of overdraft loans you need to know
This is a form of borrowing that is applied to current accounts. Mainly to meet consumption needs on a whim, unscheduled. May need to review assets, but may not. In fact, not all banks can easily give you an overdraft loan. Most financial institutions apply extremely high overdraft interest rates, up to 1.5 times higher than normal interest rates.
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Overdraft loans and things to note (Internet source)
How to calculate overdraft loan interest
The overdraft loan interest rate is calculated according to the following formula:
Total monthly overdraft interest = (real overdraft balance * overdraft interest rate/360 * actual overdraft days)
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For example: The amount you owe overdraft: 5 million (ie, when your account has 0 dong, you get a bank overdraft of 5 million). Interest rate: 25%/year. Time: 1 month
So the total monthly overdraft interest is: 104,166 VND
You should also remember that interest is always calculated on the reducing balance!
Thus, this form of overdraft loan also has a good side that meets your payment needs and a bad side is a rather high interest rate. Particularly for Timo digital bank, we give you the opportunity to get a free loan with the condition that you pay the loan before 5 pm on the same day. This is an advantage of Timo Fast Cash that you should not ignore. If you are not a Timo member, register now to enjoy these benefits of Timo digital bank!
Live smarter, more quality with Timo. Sign up and wait! For more information, please contact the toll-free hotline 1800 6788.
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