ZIMSEC O Level Commerce Notes: Money and Banking: Bank Loans and Overdrafts
|Is a formal way of borrowing||Is an informal way of borrowing|
|Is available to anyone who meet the requirements||Is available to current account holders only|
|Collateral security is needed||Collateral security is not needed.|
|A loan account is opened||No loan account is opened.|
|Interest is charged on the whole loan amount||Interest is charged on the oustanding amount on a daily basis|
|The rate of interest is fixed||The rate of interest is variable|
|Regular payments via instalments||Repayments are irregular|
|The interest rate is usually low||The interest rate is usually high|
|Most suitable for long term projects||Most suitable for short term working capital|
|The repayment period is fixed||The repayment period is not fixed|
To learn more about Bank Overdrafts and Bank loans go to this page.
To access more topics go to the Commerce Notes page
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