Overdraft facility credit
The term overdraft facility is a special form of credit. granted by banks to the self-employed or to the owner of a trade. The amount advanced by the bank is available to the borrower in the form of an overdraft facility.
The overdraft facility has many similarities to an ordinary overdraft facility for private individuals. After granting this loan, the borrower has a certain amount at his disposal that he can use flexibly. In this way, he can advance his own business and temporarily bear the resulting costs. In the event of a short-term business downturn, he can still pay for fixed costs such as rent and material costs on time. The loan can also be used for one-off, expensive purchases.
The borrower’s own actions can be made much more flexible. It is up to the borrower to set it up. An advantage of this type of loan is that the loan is usually granted without any problems.
Loan depends on current situation
The current account credit must be handled in the same way as other loans. The loan is usually approved for a predetermined period of time and carries an appropriate interest rate. The amount of the loan depends on the current financial situation of the borrower, and in some cases also on its future prospects. The conditions of the credit institution itself also play a role. The credit line usually corresponds to twice or four times the monthly salary. This framework can be fully used.
The interest rate on the overdraft facility is unfortunately very high compared to other loans, but there are no further account fees. However, it would be better to use a different loan for long-term purchases. The interest rate is calculated on the borrowed amount and is deducted from the account at fixed intervals. In order to receive a current account credit, the customer must open a special current account.
This is now possible at many banks. For the best conditions, you should compare the credit institutions with each other before opening. In this comparison, the duration and the amount of the loan and the interest rate should be scrutinized.