Anyone who needs money in a manageable framework today has various options for fulfilling some wishes with additional money. If it is a cheap loan, you can apply for an installment loan from the bank. On the other hand, as a bank customer you can also apply for a overdraft facility. The overdraft facility is an agreed overdraft facility for the checking account. The customer may overdraw his checking account within this overdraft framework. Interest rates for this overdraft facility are, however, comparatively high. As soon as money arrives in the account, the overdraft amount is reduced. Only interest is added to the amount by which the account is overdrawn.
The installment loan has a different approach.
It is initially a normal loan for a certain amount. When the contract is concluded, the loan amount, the interest rate and the contract duration are determined. The monthly rate then remains the same until the end of the term of the contract. With an installment loan, the interest rate is significantly lower than with an overdraft facility. The advantage is that the loan is cheaper with clear terms. There is also a fixed date when the loan will be repaid. With a overdraft facility, however, the account owner can quickly get used to the fact that he has always overdrawn the account. It is therefore more difficult for him to bring the current account to plus.
Overdraft facility due to the low interest rates
The installment loan is in most cases a cheaper alternative compared to the overdraft facility due to the low interest rates, but if it should be quick, an urgent loan is recommended. It is suitable for planned purchases that exceed the current account. Such an acquisition can be financed in a very manageable and calculable manner. With a defined contract term, repayment is secure and leads to financial discipline.