Repayment of the overdraft

Not so long ago in the credit market, a new concept - the overdraft. Nevertheless, for many bank customers took advantage of this simple and convenient service.
Overdraft is a short-term loan that is provided with a lack of equity in the current account of the client. Get it can be individual entrepreneurs and legal entities. In short, in certain situations overdraft allows the client to "go into minus." If the client needs to use a larger sum than he has in the account, it is not necessary to issue an additional contract. Overdraft is available in non-cash form, the money comes at the expense of the borrower.

Typically an overdraft is provided in the bank, which is cash and settlement services the borrower. To conclude an agreement, an individual entrepreneur or legal entity must meet certain requirements. Account must operate a minimum of six months, to the same borrower should be a good credit history. In this case, the bank may approve the overdraft.
Overdraft may be provided with collateral, but not in all cases. As a rule, you will need to provide a guarantee from a third party or the owner of the business.
overdraft limit
Overdraft limit is the amount that the borrower can use as credit funds. The overdraft limit is determined by the bank at the conclusion of the contract. Usually it is calculated based on the average monthly turnover on the account of the borrower. As a rule, the amount does not exceed half of the income for the last few months, but different banks can offer their more or less favorable conditions. Depending on the credit history and the volume of traffic in the account limit may be revised.
repayment of the overdraft
As a rule, to pay off debts to an individual entrepreneur or legal entity is not necessary to perform additional operations on the account. Bank debit funds without acceptance. The amount of debt written off as soon as the funds come at the expense of the borrower. Interest on the loan the bank may deduct a monthly or at the end of the contract period.
Overdraft has a favorable advantage compared to other loans. The interest rate for this type of lending is much lower. As a rule, it does not fluctuate in the range of 10-20% per annum.
When choosing a bank should not only pay attention to interest rates because lending institutions charge different fees for account maintenance.
So the bank with which the client enters into a contract on overdraft may take an additional one-time or monthly fee. It may be a small amount, but it must also be taken into account.