Overdraft Facility

Unlike a term loan with a fixed disbursed amount, an overdraft gives you a pre-approved limit you can draw from as needed, repay, and draw from again - interest accrues only on the amount actually used and only for the time it's outstanding, not on the full sanctioned limit. Often available against a salary account, a fixed deposit, or other collateral, it's a flexible short-term borrowing tool - though the interest rate and any renewal fees should be compared against a personal loan before assuming it's automatically the cheaper option.