Commerce WAEC

Which of the following is a source of short term finance?

A. hire purchase
B. overdraft
C. lease
D. debenture

Correct Answer: Option B

B. overdraft

Explanation

An overdraft is an extension of credit from a lending institution when an account reaches zero. Overdrafts come with interest and additional fees and should only be used sparingly. An overdraft will allow you to borrow money through your current account. Usually, there’s a charge. You might request one from your bank or your account might automatically offer you an overdraft

Loan (such as an overdraft) with or without a fixed maturity date, can be recalled anytime (often on a 24-hour notice) by the lender and must be paid in full on the date of demand. Also, the borrower can pay off a demand loan at any time without incurring early-payment penalties. Also called call loan or money at call.

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