What is the difference between an instalment loan, a revolving loan and an overdraft?
An instalment loan requires you to repay the principal and interest regularly, usually monthly. Interest is calculated at a predetermined interest rate according to the loan tenor you selected. A revolving loan or an overdraft is a credit limit granted to your revolving or current account, usually for standby purposes. Interest is calculated on the drawn amount on a daily basis. The main difference between the two is the money withdrawal method. A revolving loan involves an ATM card or credit card to withdraw cash at an ATM machine or make transactions at merchants by EPS. An unsecured overdraft facility involves the current account and the transactions made through this account. No withdrawal fee will be charged for an unsecured overdraft facility.
