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Dropline Overdraft
Overdraft Facility

Dropline Overdraft

A Dropline Overdraft allows you to overdraw funds from your current account up to a certain limit, with the withdrawal limit reducing every month from the sanctioned limit.

Key Features
Withdrawal limit reduces monthly from sanctioned limit
Available as secured or unsecured loan
No collateral required for unsecured option
Favored by retailers, traders, and manufacturers
Interest calculated daily, charged monthly
One-time processing fee
Combination of overdraft and term loan
Available monthly, quarterly, or yearly
No yearly renewal charge
Benefits
More flexible than traditional loans
Only borrow what you need
No monthly repayments like term loans
Interest charged only on utilized amount
No penalty for early repayment
Operational flexibility
Fusion of term loans and overdrafts
Detailed Information

Everything you need to know about Dropline Overdraft, presented exactly as provided.

With a Dropline Overdraft, a borrower can overdraw funds from their current account up to a certain limit, but at the same time the actual withdrawal limit of the overdraft reduces every month from the sanctioned limit.

Thus, a borrower can withdraw more funds than those actually present in their account, up to a certain limit. But the maximum overdraft limit sanctioned will reduce every month. The interest is applicable only on the borrowed amount and not on the entire overdraft limit. Funds can be deposited anytime back into the account to reduce the outstanding balance.

FEATURES OF DROPLINE OVERDRAFT

  • The predominant feature of a dropline overdraft is that the withdrawal limit reduces from the sanctioned limit every month.
  • A dropline overdraft can be availed both as a secured or an unsecured loan.
  • In case of unsecured dropline overdraft, no collateral has to be submitted.
  • A dropline overdraft is usually favoured by retailers, traders and manufacturers.
  • The interest rate is calculated on a daily basis but charged on a monthly basis.
  • A one-time processing fee discharged when you avail a dropline overdraft.
  • Dropline overdraft is basically a combination of an overdraft and a term loan.
  • It can be availed on a monthly, quarterly or yearly basis.
  • Banks do not levy a yearly renewal charge for a dropline overdraft.

Benefits of Dropline Overdraft

  • An overdraft is more flexible than a loan because you only borrow what you need, which may make it less expensive.
  • No monthly repayments like term loans for the facility.
  • The interest is charged only with the amount used out of the facility.
  • In most cases, there is no penalty for paying off an overdraft sooner than intended.
  • Can be operationalized monthly, quarterly, semi-annually, or annually.
  • A fusion of term loans and overdrafts.

Frequently Asked Questions

Get answers to common questions about Dropline Overdraft

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