The 'secret loan' of a salaried person, becomes a true friend in an emergency…

Tough times never come with any warning. When an emergency comes, the most needed thing is money. In such a situation, a credit card is an option, but banks provide another special facility for working people, which most people are not aware of. This is a loan in which there is no hassle of paying EMI every month. Let's understand this facility step by step in the slides below.

Got rid of EMI!

Are you also troubled by the EMI every month? Imagine getting a loan in which there is no hassle of paying an installment every month. Yes, banks provide such an amazing facility for working people. This is called 'salary overdraft'. This can prove to be your best friend in difficult times.

You will get up to 3 times more money than your salary.

You get this facility on your salary account. Under this, you can take two to three times your monthly salary as a loan from the bank. For example, HDFC Bank can give you an overdraft of up to 3 times your monthly salary (maximum Rs 1.25 lakh). However, this limit depends on your credit history and the rules of the bank.

Interest only on the amount used
In a personal loan, you have to pay interest on the entire loan amount, whether you spend it or not. But in overdraft, interest is charged only on the amount that you withdraw from your account and use. Suppose you got a limit of Rs 1 lakh and you withdrew only Rs 20,000, then interest will be charged only on Rs 20,000, not on the entire Rs 1 lakh. The best thing about it is.

There is no hurry to repay. Pay when you have money
Unlike other loans, there is no compulsion to pay EMI on a fixed date every month. You can repay the principal amount of the loan at your convenience. According to the HDFC Bank website, you only have to pay the interest amount every month. You can also repay the principal amount together.

Also, keep in mind the charges.

There are different rules regarding the processing fee for this facility. Some banks do not charge any processing fee for this, while some banks charge nominal charges.

In how much time does the loan have to be repaid?

The tenure for repaying this loan is also different in different banks. HDFC Bank gives one year for this. This limit can be renewed for 1 year after 12 months. In such a case, you have to pay Rs 250 renewal charge, government fee, tax, etc.

How and who gets this facility?

This facility is available only to those employed people who have a salary account in that bank. The bank offers you this facility on the basis of your credit score, your salary, and company profile. If your record is good, then it is possible that this facility is already activated in your account. You can find out about it in your netbanking or by going to the bank.

Does taking an overdraft affect your credit score?
If you pay interest on time and repay the entire amount within the stipulated time, then your credit score will not be affected. Rather, it reflects a good credit behavior.

How do I know if I can get this facility or not?
You can check this by logging in to your bank's mobile app, netbanking portal or you can directly visit your bank branch to get information about this.

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.