What Is a Line of Credit?
A Line of Credit (LoC) is a revolving credit facility that allows you to borrow up to a pre-approved limit, repay it, and borrow again—just like a credit card, but with lower interest.
You only pay interest on the amount used, not the total sanctioned limit. It’s great for managing cash flow uncertainties.
What Is an Overdraft Loan?
An Overdraft (OD) facility is tied to your bank account and allows you to withdraw more than your account balance up to a limit, usually based on your income, collateral, or relationship with the bank.
Like LoC, interest is charged only on the utilized amount, and you can repay anytime within the limit period.
Key Differences: Line of Credit vs Overdraft
| Feature | Line of Credit (LoC) | Overdraft (OD) |
|---|---|---|
| Source | Separate loan account | Linked to your bank account |
| Interest Rate | Often lower than OD | Slightly higher |
| Usage Flexibility | Revolving – borrow, repay, repeat | Mostly for emergency cash shortfalls |
| Collateral | Optional (unsecured available) | May require security or deposit |
| Common Users | Freelancers, SMEs, professionals | Salaried or business owners |
Why Choose Line of Credit / OD with Vizzve Finance?
✔️ Instant access to flexible funds
✔️ Interest-only on usage, not the full limit
✔️ No prepayment charges
✔️ Easy digital access via Vizzve’s platform
✔️ Available to salaried, self-employed & businesses
Best Use Cases
Managing irregular cash flows
Funding small business needs
Paying vendors or short-term expenses
Handling personal emergencies
Eligibility & Documents
PAN & Aadhaar
Bank account details (for OD)
Income proof or business proof
Last 6–12 months’ bank statements
Good credit score (650+ preferred)
FAQs
Q1. Which is better – Line of Credit or Overdraft?
If you need a standalone flexible credit, choose Line of Credit. If you want funds linked to your bank account, choose Overdraft.
Q2. Can I get these without collateral?
Yes, Vizzve offers unsecured lines of credit and overdraft options for eligible customers.
Q3. How quickly can I access the funds?
Funds are available instantly or within hours, depending on verification.
Published on : 24th July
Published by : SMITA
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