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+91 9619612614
An Unsecured Overdraft (OD) Facility is a pre-approved credit line linked to your salary account.
It works as a financial safety net—allowing you to withdraw funds even when your account balance is zero, up to a sanctioned limit.
Unlike a Personal Loan, interest is charged only on the amount you use and for the number of days you use it, making it ideal for short-term cash needs.
Since salary overdraft is unsecured, banks maintain strict eligibility rules.
Pre-Approved OD:
One-click activation using OTP and acceptance of terms
Manual Approval:
Submit salary slips and bank statements for review
Which option is better depends on how long you need the funds.
| Feature | Personal Loan | Salary Overdraft |
|---|---|---|
| Best For | One-time large expense | Short-term cash flow gaps |
| Interest Charged | On full loan amount | Only on used amount |
| Repayment | Fixed EMI | Flexible (interest monthly) |
| Prepayment Charges | 2% – 4% | Zero |
| Disbursal | 24–48 hours | Instant once activated |
Annual Renewal Fee:
OD facilities may charge ₹1,000 – ₹2,000 yearly to keep the limit active.
Higher Interest Rates:
OD interest rates are usually 2%–4% higher than personal loans.
Compound Interest Risk:
Unpaid monthly interest gets added to principal, increasing borrowing cost.
Recall Risk:
Banks can withdraw or reduce the OD limit if salary credits stop or credit score drops.
YES, choose OD if:
You face short-term cash shortages (5–10 days)
You want EMI bounce protection
You need flexible borrowing and repayment
NO, avoid OD if:
Pre-Approved OD: Instant activation
Manual Approval: 2 – 5 working days
Usage: Immediate after activation
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