Loans Overdraft

Sr. No.	Basis of Difference	Loans	Overdraft
1.	Meaning	It is an arrangement under which a certain amount is advanced for a certain fixed period.	It is an arrangement under which the current account holder is allowed to overdraw from the account.
2.	Eligibility	Any account holder i.e. current, saving, fixed deposit can get a loan.	Only current account holders can get overdraft facility.
3.	Rate of Interest	It is lower than that of overdraft.	It is higher than that of loans.
4.	Duration	It is for a long period.	It is for a short period.
5.	Interest charged	Interest is charged on the amount of loan sanctioned, whether withdrawn or not.	Interest is charged on the amount actually withdrawn.
6.	Amount	Amount of loan is larger.	Amount of overdraft is smaller.
7.	Separate account	Separate account is to be maintained.	No separate account is required.
8.	Purpose	The purpose is to meet long term requirements.	The purpose is to meet short term working capital requirements.
9.	Repayment	Amount of loan is to be repaid in installments or in lump sum on the due date.	Amount of overdraft is adjusted against the deposits in the current account.
10.	Security	Some valuable assets are to be given as security.	Overdraft is sanctioned against hypothecation of stock.