Compare Interest Rates, EMIs, and Hidden Fees Before You Borrow
In a world where instant credit is just a few clicks away, choosing between a personal loan and a bank overdraft can significantly affect your financial health. Both offer quick access to funds—but the cost, repayment structure, and eligibility vary drastically.
This July 2025, FinCrif brings you an in-depth comparison of personal loans vs. overdrafts, using real data from top banks and NBFCs in India.
📌 What is a Personal Loan?
A personal loan is a fixed-term unsecured loan that comes with:
- Predefined EMIs (Equated Monthly Installments)
- Fixed interest rates (ranging from 10.25% to 18% per annum)
- Tenure between 12 to 60 months
- Lump sum disbursal
✅ Ideal for: Salaried or self-employed individuals looking for medium to large funding (₹50,000 – ₹25 lakhs) for planned expenses.
📌 What is a Bank Overdraft?
An overdraft facility allows you to withdraw money even when your bank balance is low or zero, up to a predefined limit.
- Interest is charged only on the amount used
- Typically used for short-term liquidity gaps
- Limits based on income or collateral
✅ Ideal for: Business owners or individuals with unpredictable cash flow who need flexible access to funds.
📊 Comparative Chart: Personal Loan vs Overdraft (FinCrif Partner Banks – July 2025)
Feature | Personal Loan | Bank Overdraft |
Disbursal | Lump sum | As-needed (up to limit) |
Interest Rate | Fixed (10.25% – 18% p.a.) | Variable (12% – 22% p.a.) |
EMI | Yes, fixed monthly | No EMI – pay interest on usage |
Processing Fees | ₹999 – ₹3,000 (one-time) | 1% – 2% of limit annually |
Tenure | 1 to 5 years | Renewable yearly |
Prepayment Charges | 0% – 4% (varies by bank) | None (if repaid within limit) |
Best Use Case | Medical, Travel, Debt Consolidation | Business capital, Utility bills, Tax dues |
💡 Which Option Is Cheaper in the Long Run?
🔸 Scenario 1: You Need ₹1,00,000 for 12 Months
- Personal Loan EMI (at 12%) = ₹8,884/month
- Total Repayment = ₹1,06,608
- Overdraft Interest (at 18%, full usage) = ₹18,000
- Annual Fees = ₹1,500
- Total Cost = ₹19,500
👉 Winner: Personal Loan (cheaper by ₹12,892)
🔸 Scenario 2: You Use Funds Intermittently (only ₹50,000 for 6 months)
- Overdraft Interest (₹50k for 6 months @18%) = ₹4,500
- Personal Loan (₹1L EMI) = Still repay full ₹1L EMIs
👉 Winner: Overdraft (you pay only for usage)
🎯 Key Takeaways
- Use Personal Loan if: You need the full amount upfront, want fixed EMIs, and prefer structured repayment.
- Use Overdraft if: Your need is irregular or fluctuates, and you don’t want to borrow the full amount at once.
✅ FinCrif Recommendations (July 2025)
Here are some hot picks
🏦 Personal Loan
- Axis Bank – ₹1L @10.75% – EMI ₹8,863
- HDFC Bank – Instant disbursal within 10 mins
- Bajaj Finserv – No foreclosure fee on >12-month plans
🏦 Overdraft Facility
- ICICI Bank OD – Up to ₹5L with 12.99% rate
- Kotak Flexi Credit – Usage-based billing, zero EMI
- Bajaj Flexi OD – Based on PAN and salary, instant limit approval
📱 Want to Check What Suits You Best?
Use the FinCrif EMI Calculator to compare monthly payments for both options based on your need, usage, and term.
🔐 Safe, Verified & Instant
All FinCrif-partner loans and overdrafts are from RBI-approved NBFCs and banks. Apply securely, with 100% paperless onboarding and real-time status tracking.
Choosing the right credit line—personal loan vs. overdraft—can save you thousands over the year. With FinCrif, you don’t just compare offers—you make smarter financial decisions backed by real numbers and expert curation.
💬 Still confused? get in touch with a FinCrif loan advisor - www.fincrif.com
