Question

What is the difference between a loan and an overdraft?

Answer 1

S. No.	Basis	Loan	Overdraft
1.	Meaning	A loan is a specified sum of money borrowed from a bank or financial organisation, usually for a specific purpose, and repaid in installments with interest over a fixed period.	An overdraft is a bank-provided service that allows the account holder to withdraw more money than is available in their account up to a certain limit.
2.	Tenure	Has a set tenure (e.g., one year, five years, etc.).	There is no fixed tenure; it is determined by the deal with the bank.
3.	Interest	Interest is charged on the entire loan balance from the beginning.	Interest is charged only on the amount overdrawn, not the entire limit.
4.	Amount Limit	The amount is set and determined at the time of loan approval.	The overdraft limit is set, however, the user can withdraw any amount within it.