Almost everyone has a checking account where everything financial is regulated. Banks also use the checking account to issue a disposition loan – or overdraft facility for short. If the customer has a regular income, the bank can provide up to three Netti monthly salaries for free disposal. With the overdraft facility, the customer receives money that he actually doesn’t have. However, a disposition that is managed carefully is a good thing.
Especially when a urgent invoice flutters into the house at the end of the month and has to be paid directly. The account is empty, but the overdraft facility is available. But the overdraft facility is tempting and the customer has exceeded the credit limit granted at lightning speed. At the latest when the incoming salary no longer covers the overdraft facility, a loan should be considered despite the minus on the account.
Anyone who uses his disposition does what he was set up for. A short-term financial bottleneck can be compensated with the overdraft facility. The following month, however, the account should be in the black. Theoretically simple but mostly not feasible. If you only live from the overdraft facility in the middle of the month, the time for a loan is ripe despite the minus on the account.
Especially with regard to the high interest rate that the overdraft facility has. Banks charge double-digit interest rates, which makes it the most expensive loan. Apply quickly and easily, spend quickly, and quickly fall into debt. This is how you can describe the way of disposition.
There are not a few customers who have slipped into financial distress due to the overdraft facility. Three net monthly salaries allow banks to overpay most customers. If you now earn 2,000 USD net, for example, you could have a disposition of 6,000 USD. A nice chunk of money that many customers can no longer pay. If you are thinking about a loan despite a minus on an account, you should make sure that the loan has favorable interest rates.
For the loan, the customer can go to the house bank that provided the overdraft facility. However, this is more expensive than direct banks on the Internet. The house bank will approve the loan despite the minus in the account if the credit rating of the customer has remained the same. The loan seeker should not act hastily when looking for a loan. With a credit comparison, he can make a cheap provider and immediately apply for the loan.
The loan is not always requested to replace the overdraft facility. The customer needs financial resources and therefore puts a loan in the account despite the minus. In general, this is also possible if the creditworthiness is positive. The lender bank will examine this extensively. It is important that the minus on the account has not yet led to any negative entries in the Credit Bureau.
This could happen if the bank often returned a direct debit because the account was not funded. However, other negative entries such as an unpaid and already remindered invoice can also burden Credit Bureau. The harder the entry, the harder it will be to get a loan despite a minus in the account. With the credit comparison, the customer will see that the individual providers have different interest rates and conditions. The loan comparison is free of charge and is in no way mandatory. It provides results accurate to the day in terms of the interest rate.
If the customer has decided on a provider, he can make the loan application directly via the comparison. After the bank’s application has been received, it will conduct a Credit Bureau query. If the customer fulfills all the conditions of the bank, it will still check the documents and will approve the loan. The money is then transferred immediately. With an installment loan, the customer can have the loan as he wants. He can use it to balance the account or finance consumer goods with it. The bank does not care what the purpose is, the customer does not need to bring any receipts.
For many customers, looking at the current account balance is more than bleak. The overdraft facility is a loan without paperwork, which is granted quickly and easily and is just as quickly in the red. Many adults are tempted to lend quickly and easily. Although this is not a broken leg, it is still associated with considerable costs. Current figures from 2014 show that the effective annual interest rate for the overdraft facility is 10.65%.
On the other hand, if you take the interest rates on installment loans, many a bank customer is surprised. The low interest rate level does not seem to have reached banks in terms of overdraft facilities. Once the account is in the red, many attempts to write in the black are very commendable but mostly not feasible. Account holders who want to balance the overdraft facility with iron saving measures simply fail.
A year later, he may still be standing with what he was supposed to be like the year before. However, if there is a new loan requirement because a larger purchase is due, the customer should not hesitate any longer and strive for a loan despite a minus on the account. The customer should know that the overdraft facility is a loan that has been granted to every solvent debtor and has only a limited impact on the creditworthiness.
A small example of how expensive the overdraft facility is against an installment loan: If the account is in the red with 3,000 USD, then a small loan is due. The maximum term is 36 months, of course the creditworthiness must be assumed, the interest rate is a good 2.69% APR. With a term of three years, a total of 124.49 USD in interest accrues. The overdraft facility in the same amount already costs USD 319.50 a year.
There are many reasons why normal lending is no longer possible. It would be important, especially given the tight financial situation, not to pay high interest rates on the loan despite a minus on the account. Many loan seekers only get a loan if other collateral can be presented. That could be a second borrower or a guarantor.