Once you apply for a loan and fill in the form , the bank normally gives you two options to make a repayment either through (electronic clearing systems ) ECS or a cheque payment. Customers normally choose an ECS payment as it is hassle free. An ECS payment is done by the bank . It is a transfer of payment from one bank to another without the involvement of the customer. The customer has to only give a one time instruction to debit his bank and it is then done periodically every month to make a repayment for his loan amount. It is an electronic mode of transfer which happens via the clearing house from one bank to another. This system can be used both for debiting an account or crediting an account. This is an easier mode of payment as the customer has to only ensure that there are funds in his account on the specific date the debit takes place. Also for the banks it is convenient as it is a paperless mode hence it is preferred.
Where as in a cheque payment mode, the customer would have to either come to the bank and give cheques every month for his repayment or give post dated cheques to the bank. The customer in this case has to go through the hassle of visiting the bank every month and standing in a line to deposit the cheque.
Hence ECS is a preferable mode of payment as it is hassle free both for customers and the banks.