Now, it is possible to get an OD facility in Bangalore with much ease! Earlier getting an OD facility was quite difficult since banks will ask for collateral. Now few banks in Bangalore will provide you OD facility just like the way you would get an Unsecured Business Loan. However, not many banks provide this kind of facility.
Advantages of taking an OD facility instead of term Loans?
- The biggest advantage is that you pay interest on daily OD amount utilization against a monthly interest which will be levied for a fixed tenure of loan which is usually 3 years in case of an Unsecured Business Loan. This way you will be able to reduce the interest payable to a very large extent.
- You have the option of paying more than the EMI amount towards the OD account
- You do not pay any pre closure charges since you can pay the entire amount and keep the OD balance zero. You can opt not to renew it end of the year thereby paying zero closure charges
- OD facility will be given for a longer tenure which usually is up to 8 years instead of a 3-4 year tenure in case of a normal Business Loan. Only thing is that you need to renew it every year by paying nominal renewal charges.
- OD limit can be increased every year based on your transactions & business turnover.
How do get an Unsecured OD Facility?
There are few banks which provide this facility in Bangalore. These banks provide Business loans as well. You need to inform them that you would like to go in for OD facility instead of a term loan at the time of application. Certain banks will allow you to choose this facility just before disbursement as well.
Points to be considered before opting for an OD Facility.
- Banks are generally conservative while providing an OD facility and will carry out more due diligence before giving this facility as against the normal Business Loan.
- Certain banks will not give you this facility in case you already have a running OD or CC Facility in another bank.
- This facility is ideal for customers who receive bulk payments at regular intervals so that they can use this facility more like a Working Capital Facility. They can make maximum payments to this account thereby reducing interest outflow considerably.
- Important point is to ensure that you do not use for more than 90% of the OD limit. Else you will be considered as credit hungry and may impact your future borrowings from the same Financial Institution or other Financial Institutions.
- You need to keep track of the OD utilization limits else you might end up bouncing few cheques which will have an adverse impact on your account & Credit ratings
To know more & avail an Unsecured OD Facility, get in touch with us