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Comparison of overdrafts and short-term cash loans for meeting temporary cash crunch

It should hardly come as a surprise that sometimes life throws us some curveballs. Things can get tough sometimes due to unexpected and unfortunate circumstances. Many situations often put anunexpected financial strain. A lot of people don’t have enough savings to cover any emergency situations. Hence, we have to look at our options of borrowing money to address such situations. The most common options that most people consider are overdrafts and short-term cash loans. Let us take a closer look at both of them and compare them to find the appropriate option.


Overdraft facility is typically offered by your bank. This feature may be offered automatically or you may need to specially request for it. It allows you to withdraw money or draw cheques even if you have zero balance in your account. The extra money is shown as a negative balance or a credit. There is usually a predetermined limit for the maximum negative balance, beyond which transactions will be denied. This overcharge amount usually comes with substantial fees. The actual fee may vary from bank to bank, but it is usually in the form of interest, a fixed fee or a daily charge. This is added to the credit you owe the bank and is reflected in the negative balance. This usually adds up to a very highinterest rate. There is also usually a limit on how long you are allowed keep a negative balance. The bank automatically recovers the amount when any money is deposited in the account. The negative balance is subtracted first and then you can use the remaining balance. The prime advantage is that once you have overdraft facility approved, there is no extra procedure at all. You can continue to use money even after you run out. Though the high fees must make you wary. This is a suitable option only if you need urgent cash and can’t even wait a few hours.

Short-term loan

This is usually a more suitable option and allows for more flexibility. This is similar to a traditional loan, though carries typically a higher interest, lower amount and lower repayment period. This is a nice intermediate between using overdraft and a long-term loan. Many short-term loan lenders also offer very easy approval process. Most such loans are unsecured, meaning that you do not need to mortgage any assets. You also don’t need to undergo a credit check. The approval process can take a few hours to up to a day. The only requirement is that you need to show proof of stable income.


Even if you don’t have savings at hand, there are ways to deal with temporary financial hits. Two examples areoverdrafts and short-term loans. Overdraft offers immediate assistance with no paperwork or process, but at a high cost and is feasible for a duration of a few days. On the other hand, short-term loan offers higher amount with a little bit longer approval process and repayment term. Though you can get the money by the next day at the latest and repay it by the next month or get a tenure of a few months. www.needafastloan.co.nz is a well established provider of cash loans.

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