If you regularly conduct transactions with the Bank, you’ve probably heard the term “overdraft”. So “What is overdraft?” , What is an overdraft loan? and all related issues will be answered by Banktop in this article.

What is overdraft?

Wikipedia answers a question about the definition of overdraft as follows: An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero, In this case the account is said to be “overdraft”.

To better understand, overdraft or overdraft is a bank that allows customers who are using the bank’s debit card to spend more than the amount when the card has a zero account. Overdraft loan limit relatively high, can be equal to 5 times the monthly salary and the maximum can be up to 100 million VND.

What is overdraft?
What is overdraft?

For example: Customers apply for VPBank overdraft loans and are granted an overdraft limit of VND 50 million. In case the customer uses up all the money in the overdraft account, the customer can still use an additional VND 50 million and charge interest as prescribed in the contract.

Features of overdraft loans

Features of overdraft loans include:

  • Compared with different forms of loans, unsecured consumer loans, mortgage loans, installment loan The form of overdraft loan is little known by customers.
  • Overdraft loan limit depends on various factors such as credit history CIC of customers, average income…
  • Overdraft loans support customers with unexpected financial needs but no money in their accounts.
  • Interest rates on overdraft loans are higher than regular interest rates.

Popular types of overdraft loans

Currently, banks support two types of overdraft loans: unsecured overdraft loans and mortgage overdraft loans.

  • Unsecured overdraft loan: similar to form unsecured loanmainly based on the customer’s income to grant overdraft limit.
  • Mortgage overdraft loan: basically like a mortgage loan, customers need collateral. Therefore, the mortgage overdraft loan limit is often very high, possibly up to hundreds of millions of dong.
overdraft loan
Types of overdraft loans for customers’ reference

What are the terms of the overdraft loan?

To apply for a bank overdraft loan, a customer must meet the following conditions:

  • Customers over 20 years old and under 60 years old at the time of closing the application.
  • Having household registration or KT3 at the temporary residence address.
  • Having a labor contract and a minimum income of 4 million/month for unsecured overdraft loans
  • Having assets for overdraft mortgage loans.

How is overdraft interest calculated?

The formula for calculating overdraft loan interest rate is as follows:

Total monthly overdraft interest = ∑ actual overdraft balance * overdraft interest rate/360 * actual overdraft days.

Specific examples of how to calculate overdraft interest rates:

Customers use the amount within the overdraft limit of VND 20,000,000, the interest rate is 20%/year and the overdraft period is 15 days.

Thus, the calculated profit = 20,000,000 * 20% / 360 * 15 = 166,667 VND

Should you get an overdraft loan?

As mentioned above, the interest rate on overdraft loans is higher than conventional loans, so should you borrow overdraft or not?

The answer is that it depends on your capital needs, because only when the amount of money is incurred, the overdraft interest will be charged. In unexpected cases you need to use money but there is not enough money in the account, the amount in the overdraft account is the best solution.

List of banks that lend you the lowest interest rate overdraft

Most banks support overdraft loans, such as:

  • Agribank overdraft loan
  • VPBank overdraft loan
  • BIDV overdraft loan
  • Vietinbank overdraft loan
  • Vietcombank overdraft loan

Learn how to get out of debt you should know


In the above article, Banktop has provided you with sufficient information to help you answer the question “What is overdraft?and overdraft loans. If you have a demand quick loanyou can contact Banktop’s Hotline for support.

Information edited by: banktop.vn


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