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Dropline Overdraft

What is Dropline overdraft loan?

Dropline overdraft loans are secured loans where the borrowers pledge their property as a security. Sum of the amount lent is 50%-80% of the property's market value. The loan amount is reduced at various intervals like monthly, quarterly, semi-annually OR annually from the principal depending upon the lending bank’s policy. Ownership of the property pledged remains with the borrower only.

Why should I take dropline overdraft? How will it help me?

Every businessman wants to avoid a liquidity crunch especially during a peak season or when they have an expansion plan. While the market offers business loans, the Dropline Overdraft Loans facility is an extension to the same which can easily be used whenever required.

It's easy on the pocket considering the interest is charged only on the amount utilized! Other benefits are as follows:

1) Higher Loan Amount - The Overdraft loan can be availed from Rs.20 lacs to Rs.100 crores depending upon the value of the property being pledged and the income.

2) Ease of Paying Back - Longer tenures help the borrower to plan the repayment with ease. An average tenure for Dropline Overdraft Loans is 10 years, which gives flexibility to the borrower for repaying EMI's from the income earned.

3) Quick Processing - LoansJagat helps businesses to get access to overdraft loans within 6-7 days of processing which helps one to get funds immediately.

What are the documents required for taking Dropline Overdraft Loans?

  • Personal Documents
  1. Application form with Passport Size Photographs of all applicants and co-applicants.
  2. PAN Card of applicant and co-applicant.
  3. Identity Proof – Voter ID/ Driving License/ Passport/ Aadhar Card.
  4. Address Proof – Voter ID/ Driving License/ Passport/ Telephone Bill/ Electricity Bill .
  5. Ownership proof of residence and office either in the name of the applicant or jointly with family members.
  • Financial Documents

Self-Employed Individuals / Sole Proprietorships

  1. Latest audited ITR and financials for the last 3 years -Balance Sheet, Profit & Loss A/c., Computation of Income along with all schedules and audit report.
  2. Past 12 months Bank statements from the borrower's main account/s as mentioned in the Balance Sheet for the latest year.
  3. GST returns of the last 12 months.
  4. Sanction letter and repayment Track of any running loan.

Partnership Firms / Private Limited Companies

  1. Latest audited ITR and financials for the last 2 years -Balance Sheet, Profit & Loss A/c., Computation of Income along with all schedules.
  2. Past 12 months Bank statements from the borrower's main account/s as mentioned in the Balance Sheet for the latest year.
  3. Partnership Deed for partnership firms.
  4. Memorandum and Articles of Association and Board Resolution from the company.
  5. Certificate of Incorporation  for private limited companies.
  6. Latest shareholding patterns for Private Ltd. /public Ltd. Companies.
  7. GST returns of the last 12 months.
  8. Sanction letter and repayment Track of any running loan.

Property Papers

  1. Photocopies of Latest sale deed/ registry in the name of the borrower or their family.
  2. Photocopies of Conveyance Deed, if available.
  3. Photocopies of Property Map, if available.
  4. Photocopies of all other old relevant property papers chain associated with property.

How do I apply for Dropline Overdraft Loans?

LoansJagat offers a unique platform with access to multiple Banks and NBFCs offering overdraft loan options depending upon your requirement. An applicant has to answer 2 basic personal and financial questions.  Post their reply, LoansJagat automatically shows various options available to the borrower from different banks to choose from and decide.

Once decided, LoansJagat gives the option to proceed further either online or offline for the documentation. During this journey, a loan expert from the company helps you out to expedite the process. The borrower has complete access to track the loan application.

Why should I go with LOANSJAGAT?

We have a team of dedicated experts from financial domain who keep the interests of customers as their top priority. LOANSJAGAT has been delivering to the demands of the customers since its inception in 2002 and has established a partnership with 40 banks and NBFCs which helps us to serve our customers as per their requirement. We are a process-oriented company, always seeking to give best while safeguarding the interests and data of our customers.

Ready to take Dropline overdraft loan. Here are the top Mistakes to Avoid!

Dropline Overdraft loans are an efficient way of managing business funds as you pay interest only for the amount used.

Let us consider example of Tarun who runs a Travel business and needs funds during the peak season to book holidays for his clients. He needs additional funds to quickly book the travel for his customers. The Overdraft loan adds as an added source which he can use in case he falls short of funds. However, to utilise this facility without any hassle, he needs to avoid the following mistakes:

  1. Paperwork - Clarity should be given to the banks about the objective as the first step. Financial institutes are within their rights to know how and where funds will be used. Also, keep all the required documents pertaining to income and property ready which forms the basis for approval.
  2. Financial Position - Borrower should have a calculation of their assets and liabilities. This will help them in having the visibility on how many loans they can afford and how much EMI they can pay against the loans that shall not eat away all their income.
  3. Credit Rating - Borrowers should be aware of their creditworthiness. All banks check customer’s past loan history and repayment trends to arrive at the final conclusion on principal and interest.
  4. Agreement Terms - It’s the responsibility of the borrower to read the terms of the agreement clearly before signing. One should be clear about the charges that come with the loan in case of a pre-closure or late payment of EMI's.

Compare and Apply Dropline Overdraft with Best Interest Rates in India

Dropline Overdraft Specific FAQs

What is a Dropline Overdraft Loan?
A Dropline Overdraft Loan is a secured loan against a property which is evaluated for the creditworthiness and the loan amount is reduced frequently while the ownership of the property remains with the individual only.

Who can avail the Dropline Overdraft Facility?
The Dropline overdraft facility can be availed by both individuals and businesses. Individuals can be self-employed or self employed professionals and the businesses can be incorporated as a proprietorship, partnership, private limited or public limited companies. Clear ownership of the property is mandatory in case of secured loans.

What are the various Overdraft facilities available?
There are primarily two types of overdraft facilities available.

  • 1. Plain Overdraft Facility
    The borrower is assigned an overdraft limit on their account and the interest is charged on the amount utilised, one has to pay the annual maintenance fee for the Overdraft Facility.
  • 2. Dropline Overdraft Facility
    An Overdraft facility where the loan amount is reduced periodically, it could be monthly, quarterly or as per the terms set by the lender. There are no maintenance charges and one needs not to pay the principal amount as it eventually gets reduced to zero under periodic reduction.

How much loan can I get against the property value?
Although every lender has their own specific terms. However, as a general observation one normally gets around 70% of the property’s value as the dropline overdraft loan.

How is the eligibility calculated for the Dropline Overdraft Loans?
Here are the basic parameters for the eligibility of Dropline Overdraft Loans.

  • ● Applicant should have an active source of revenue and should be between 25 to 65 years of age
  • ● A decent credit history that allows one the eligibility to loans
  • ● Employment and Professional Experience Records
  • ● A clear purpose of the loan

Is the Dropline Overdraft loan available only against collateral?
While the overdraft loans can be both secured and unsecured. The unsecured loans are usually for a lesser amount and come at a higher interest rate similar to personal loan interest rates. While the businesses usually prefer a secured overdraft loan that gives them access to a lesser interest rate and a higher overdraft amount.

Can I utilise a co-owned property as security for dropline overdraft loan?
Yes. However, all the co-owners of the property will become co-applicants and will have to do all the formalities required for the loan.

How much time does it take to get a dropline overdraft loan?
A dropline overdraft loan can be availed within 7-10 working days after completing the necessary documentation as prescribed by the lender. LoansJagat helps with complete clarity on documentation and even provides a dedicated loan officer to help complete the formalities at the earliest. The process also includes evaluating the market value of the property which is necessary for evaluating the loan amount of the borrower.

What is the market value of the property?
Simply put it is the price a property might fetch under the current market situations

What types of properties are accepted for Dropline Overdraft Loan?
While the leading Banks and NBFCs consider residential and commercial properties. Most lenders also consider a plot of land without construction or an industrial property to provide an overdraft loan.

What is the average tenure of the Dropline Overdraft Loan?
While the tenure depends on the borrower and the lender, the average ensure for a dropline overdraft loan is normally 10 to 15 years.

What is the interest charged on the dropline overdraft loan?
Interest is calculated based on the eligibility criteria and might be different for every lender. However, in general, it ranges between 9.5% to 13% p.a for Dropline Overdraft Loans.

What are the common usages of a Dropline Overdraft Loan?
The Dropline Overdraft Loan is commonly used by businesses for managing their working capital requirements and some businesses also use these loans to manage their inventory, purchase equipment and various other usages for business growth and continuity.

What is the processing fee for Dropline Overdraft Loan?
The processing fee varies for every lender. However, LoansJagat provides complete visibility of the processing fee charged by the lenders in order to make an informed decision. While the fee varies, it is often around 1% of the loan amount.

What are the minimum and maximum Dropline Overdraft amount available?
There are several factors that determine the absolute value of a loan, these factors include the property’s market value, borrower’s credit profile, income and repayment sources, business usages amongst several others. However, most lenders offer the Dropline Overdraft Loans from INR 20 Lakhs to INR 100 Crores.

How can I avail a Dropline Overdraft Loan?
LoansJagat provides a quick and easy platform where one may provide the requirements and compare the features of the loan offered by more than 40 Banks and NBFCs to get the best deal on the Dropline Overdraft Loans. LoansJagat also provides a dedicated loan officer to help with the requirements along with the complete visibility of the loan status. The end to end loan application is being processed by LoansJagat’s professionals at the ease of your doorstep.

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