Revolving credit

The bank overdraft is limited to a checking account, granted by a credit institution, limited overdraft facility to bridge short-term liquidity problems, which is characterized by loose announcement accessibility and constant immediate repayment.

Legal bases

The bank overdraft is a loan within the meaning of § 488 BGB. If an overdraft facility granted and agreed to the Account Owner by contract, the debit posted to the respective bank account if required (target ), not, as with other types of loans on special loan accounts. The Bank is obliged to provide the borrower to keep the credit limit during the loan term in unterminated case open while the borrower to pay the interest owed and, - at the latest - due at maturity the account has recourse ( § 488 para 2 BGB). It is called overdraft because it is given to a checking account.

Species

Most common type among individuals is the overdraft facility. For companies in the overdraft is used as a so-called working capital loan to compensate for liquidity bottlenecks between about salary payment date and revenue inputs. It is also suitable as a seasonal loan if certain companies have seasonal production and sales areas (such as the ice cream industry in the summer ). Here are the spending priorities lie before the administration time points, so that the resulting liquidity gaps need to be bridged by seasonal loans. Between loans are granted if the final financing is secured, but must not be taken advantage of, because their payout requirements are not met. Where pre-financing is still no secure final financing, so in this case the creditor received a higher credit risk.

Terms and Conditions

The loan agreement contains provisions on the overdraft line of credit ( maximum limit for the credit stress), loan term, loan rates, loan purpose, and loan guarantees. Furthermore, expect the banks that the checking account at least once turns during the billing period, and consequently result in account inputs to a full repayment of the utilization or even account balance. This is an undesirable freezing can be prevented. Another characteristic of the bank overdraft is then that he automatically revives during the credit period, even if an interim balance was obtained.

Overdraft

The credit line represents the contractual limit on the use of debt, however, is not sufficient dar. this credit limit, so the borrower is obliged to inform the Bank about excessive credit limit and agreed with it an overdraft. Banks are not obliged to accept unabgesprochene dispose of the contractually agreed credit limit and can therefore also reject further orders. A so-called " tolerated overdraft " occurs, however, when the credit or expressly approved credit line for orders not sufficient, the orders are yet executed by the bank without there has been a prior agreement. Such toleration can legal for banks risks bring with them. Endure a bank for a longer period ( more than 3 months) in unauthorized overdraft, agrees tacitly ( implicitly ) a new credit agreement. banks are entitled to charge for such overdrafts a separate interest, the overdraft interest.

Termination

The bank overdraft ends with his contractually agreed deadline or with his repayment of the credit institution due to previous notice. However, the expiry of the agreed overdraft for a period or the repayment of such a loan does not lead to termination of the current account also in the rule. If a tacit agreement was reached, after which despite the expiry of the loan period, the borrower should be entitled to contractual principal use in the previous or to a different extent until further notice, the right to repayment of the bank is no longer due, but the borrower rather to use the loan proceeds to the possible at all times termination rights. Therefore, banks expect full repayment of matured overdrafts, if it should not come to renewals.