Suppose your bank honors a check for which you don't have sufficient funds in your checking account. this action means that you've arranged beforehand for a/an
a. installment loan.
b. mortgage loan.
c. personal loan.
d. overdraft loan

D. OVERDRAFT LOAN.

An overdraft loan is an granted by the bank when the check you issued is not covered by the amount in your account. The bank will honor your check but you have to pay them the difference as well as the interest that accompanies the granting of the overdraft loan.

It is better to have this arrangement with your bank rather than have the bank not honor your check and return the check to the depositor with the reason insufficient funds. Accounts with more than three bouncing checks will automatically be closed by the bank.