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ZIMSEC O Level Commerce Notes: Money and Banking: Bank Loans and Overdrafts
| Loan | Bank Overdraft |
|---|---|
| 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
