What is a difference between a loan and an overdraft?

Open in App

Solution

Loan: The bank sanctions a lump sum advance credited to the account of the borrower in one go. The interest is charged on the amount he has borrowed.
Overdraft: Overdraft allows the customer to draw cheques in excess of the balance standing in his current account. The interest is charged only on the amount over drawn.

Suggest Corrections

Similar questions

What is a difference between a solenoid and an electromagnet?

What is difference between a gland and an organ ?

Join BYJU'S Learning Program