In today's world, every legal entity or individual must understand what an overdraft is. After all, this financial instrument has been widely used recently.
So, overdraft is a form of short-term lending . Of course, for a client of a commercial bank the availability of such a service is a huge advantage, especially during a temporary shortage of funds. There are different situations in life. For example, when the settlement with the counterparty is urgent or just a week is left until the salary is received, and the limit of funds has already been exhausted. Then a person is interested in what an overdraft is and how to get it.
Each bank has the right to put forward its own requirements and conditions, the observance of which is necessary for admission to such an attractive privilege. But the following are considered basic rules:
- work experience of more than a year;
- the presence of a valid current account, operations on which were actively conducted in the last six months (a valid minimum of three months);
- within one month there should be at least 12 receipts to the account;
- absence of arrears on payment documents presented to the bank, for example, orders or request-orders.
A bank employee tells in detail what an overdraft is and fully discloses the procedure for receiving and returning it. If you meet the above requirements, then you can start collecting a package of documents. An application for the provision of the relevant service is considered mandatory. An individual needs to bring a certificate of employment, also checks his credit history, the presence of debts, other loans and more.
Overdraft for legal entities is easier to obtain, the bank is more likely to conclude an agreement with them, as the profit from transactions will be higher than from loans issued to individuals. The company transfers to the bank financial statements, balance sheets and other documents reflecting the solvency of the company.
Do not forget about overdraft in the narrow sense. This is the taking of a certain amount of money in loans from a commercial bank. And when paying for any loan, in addition to the principal amount, interest is provided as a reward for risk. Therefore, you have to pay for any pleasure, and the debt must be repaid in a timely manner. If, for any reason, the client has delayed payment, then the staff will unobtrusively remind you that the payment is due by phone. If the delay has exceeded the set time, the bank charges a fine.
Conditionally overdraft can be divided into two types:
The first type speaks for itself and means that the borrower has received prior consent to receive funds in excess of the limit. Among the permitted overdrafts, advance, technical and for collection are distinguished. The purpose of advance forms is to increase the number of target audiences of a particular bank. Technical overdraft is a loan with collateral in the form of payments made by the client. The “for collection” form assumes that the client independently carries out the majority of receipts.
An unauthorized appearance arises against the will of the bank when the borrower in one way or another receives the required amount of funds. But in this case, the client is at risk, since the credit institution usually applies a fairly stringent system of penalties.
This form of lending is beneficial for a responsible borrower, as it has significant advantages for him. For example, the level of interest rates, compared with others, is low and varies from 10% to 20%. In addition, the client gets the opportunity to almost instantly receive the necessary amount of money without observing additional formalities. It is worth noting another important aspect: no collateral is required, and to ensure the availability of a guarantee is enough.