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Thread: Nedbank Overdraft

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    Nedbank Overdraft

    Please help me. I took a bank overdraft of R2700 with nedbank and used the entire amount. Now i'd like to pay them back but dont know what the procedure is. Do i pay them a monthly amount or is a lump sum paid when i get paid into my account. I dont know how it works so any information will be appreciated. Thank you

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    How an overdraft works

    Quote Originally Posted by google
    An overdraft is a revolving credit facility loaded into your Cheque account. The facility gives you access to additional cash to cover any unplanned expenses and is reviewed every year. You should also make regular deposit into your Cheque account to keep the account up to date.
    How is an overdraft paid back?
    Quote Originally Posted by google
    Unlike repaying loans, which are fixed repayments over a set period, overdrafts are a form of revolving credit, much like credit cards. This means that you can add to an existing overdraft (so long as you remain within your authorised overdraft limit) or pay it off completely one day, then dip into it the next.
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    Thank you for your response.
    So does that mean that i pay the amount off in instalments or do i have to pay that amount once-off?

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    Diamond Member Blurock's Avatar
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    An overdraft is essentially a 30 day account to enable you to bridge the gap between selling and collecting payment from your debtor. For an individual it is to bridge the gap between when you run out of money during the month until you get your salary at the end of the month. NB! It is a short term facility and should be settled at least once every month. If not, you pay interest on interest, as interest is calculated on the daily outstanding balance and added every month.

    A revolving credit facility is a medium term facility (reviewed annually), but essentially works like an overdraft with regards to interest calculation. Basically a top-up loan with a minimum monthly repayment. Credit cards operate on almost the same principle but is the most expensive form of finance which should be avoided like the plague!

    A term loan or HP finance agreement is a contract between parties whereby an amount is advanced either to buy an item or a cash deposit into an account. This is also a medium term facility mostly up to 5 years. It has a fixed structure with capital and interest calculated and added up front, to be repaid in equal installments; monthly, quarterly or annually.

    A bond is long term finance up to 20 years and is used to purchase property, which is a long term asset.
    It is important to understand that long term assets are financed by long term finance and short term cash flow by short term finance.
    Choose your finance options carefully and ask for advice if unsure.
    You are not going to finance the purchase of a car on an overdraft and you are also not going to take out a bond on your house for that overseas holiday.
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