\With the credit through the overdraft facility, wishes can be fulfilled quickly and easily. Liquidity is the key to being able to participate in modern life. The article deals with the advantages and disadvantages of liquidity via the overdraft facility, as well as the effects on creditworthiness.
Credit, no problem with the overdraft facility – or maybe it is?
At first glance, the credit through the overdraft facility is worthwhile. The credit line that has been set up is really advantageous in order to be able to pay the unforeseen. This can be the heating bill, equally a car repair or a long forgotten bill with payment target. The overdraft facility really makes the salary account a flexible means of solvency. The account pays without any inquiries and circumstances, even if it is already below the zero line.
However, the disadvantages of the overdraft facility start with precisely this flexibility. Those who are not masters of self-control quickly succumb to the temptations of the consumer world. More is spent than would have been available for a living. The first fright comes when paying interest. The current interest rate is around 14 percent. Once the account is in the red, it is very difficult to put it back into the balance. In contrast to the installment loan, nobody issues a warning about the repayment through fixed payment dates.
The salary account affects creditworthiness.
The overdraft facility loan can also have a lasting negative impact on the credit rating for installment loans. It is more and more common practice to use the current account for the credit rating. It says more about a person’s solvency than some applicants would like. Anyone who regularly leads the salary account to the limits of the overdraft limit will not get by with their money. A constant increase in the disposable allows the same conclusion. An additional rate obligation would further restrict the financial scope.
The lending criteria require the greatest possible level of security for the capital. If there are other negative factors, perhaps a lower income or other uncertainties, there are problems. The credit rejection by overdraft is therefore more often the result for installment loans. On the other hand, there is no problem with an installment loan if you only use the loan occasionally through the overdraft facility.