Loan guide
Overdraft & Flexi Loan Options
Understand how overdraft and flexi facilities work, what they cost and when they may or may not suit your needs. Serving customers across Delhi NCR and nearby areas.
Shree Cred Capital is a DSA/loan facilitation platform, not a bank or NBFC. Final approval, interest rate and disbursal are subject to the lending partner’s policies and discretion.
What is an overdraft facility?
An overdraft (OD) is a credit limit linked to an account. You can withdraw up to the sanctioned limit whenever you need funds, repay when convenient within the lender's rules, and withdraw again. It may be unsecured (based on your income) or secured against fixed deposits, property or other assets.
How interest is generally calculated
Interest is usually calculated on the amount actually used and for the number of days it is used, not on the full limit. For example, if you have a limit but use only part of it for a few weeks, interest is typically charged only on that part for those days. The exact method, rate and billing cycle are set by each lender.
How flexi loans work
A flexi personal loan works in a similar way: you get a sanctioned limit, withdraw what you need and can often prepay and re-draw within the limit. Some flexi loans offer an interest-only EMI period initially. Read our guide on flexi personal loans for more detail.
OD / Flexi vs a conventional personal loan
- A conventional personal loan disburses the full amount at once, with a fixed EMI covering principal and interest.
- OD / Flexi gives a limit you can draw from as needed, with interest mainly on the amount used.
- Conventional loans may carry prepayment charges; many flexi products allow part-prepayment within set rules.
- OD / Flexi may carry annual, renewal or maintenance fees that a term loan does not.
Eligibility considerations
- Stable income and employment or business vintage
- Credit score and repayment history
- Existing EMIs and credit card usage
- For secured OD: value and type of the asset pledged
Fees and charges
- Processing fee at sanction
- Annual, renewal or maintenance charges on the limit
- Charges on withdrawals or part-payments, where applicable
- Penal charges for delayed payments, stamp duty and GST
Important lender-specific conditions
Tenure, repayment structure, the length of any interest-only period, limit reduction schedules, renewal terms and the right to review limits vary between lenders. These details sit in the sanction letter and key fact statement, so read them before accepting.
Advantages and limitations
An overdraft or flexi loan is not universally better than a personal loan. It suits some needs and repayment habits, and not others.
| Details | |
|---|---|
| Possible advantages | Interest mainly on funds used; ability to prepay and re-draw; useful for irregular or uncertain expenses |
| Limitations | Easy access can encourage over-borrowing; fees can add up; the rate may be higher than a term loan; limits can be reviewed by the lender |
This guide is general information, not financial advice. Features, charges, interest rates and eligibility differ between lenders and change over time. Any rates or figures are indicative and subject to lender eligibility, credit profile and current offers. Always read the lender's sanction letter and key fact statement before accepting a loan.
Questions
Frequently asked questions
Keep reading
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Eligibility, documents and indicative rates for salaried and self-employed applicants.
How to reduce your existing loan EMI
Legitimate options that may lower your EMI depending on eligibility and lender terms.
Not sure which loan fits you?
Talk to an advisor for a free, no-obligation assessment of your eligibility and suitable lending options.
Shree Cred Capital is a DSA/loan facilitation platform, not a bank or NBFC. Final approval, interest rate and disbursal are subject to the lending partner’s policies and discretion.