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Question
State the differences between a loan and an overdraft.
Distinguish Between
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Solution
| Loan | Overdraft |
| Opened against the borrower's name, with loans available for short, medium, and long maturities. | When an account holder requires credit in excess of his or her deposit amount, he or she is allowed to borrow the excess amount for a short period. |
| This function is available to all types of account holders. It charges interest on the total borrowed amount. | It is distributed to current account holders. The bank charges interest only on the extra amount. |
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