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Loan Against FD

Loan Against FD

A loan against fixed deposit is a type of secured loan that allows you to avail funds from your bank as per your requirements. It is easy to apply for and can help you get the finances you need in a timely manner.

FDs are one of the most popular investments in India. They provide the investor with a high return and low risk. However, sometimes, unexpected developments may require you to withdraw your funds from your FD account.

This is why it is important to consider the option of opting for a loan against your FD, if you find yourself in a situation where you need immediate funds. Moreover, this type of loan is available at an affordable interest rate and comes with the overdraft facility that allows you to pay interest only on the drawn amount.

What is the interest rate on a loan against FD?

Typically, the interest rate on a loan against your FD is 1% or 2% above the existing FD interest rate. Nevertheless, this rate is still much lower than the rates charged on personal loans. In addition, the equated monthly installments (EMIs) on these loans are also lower.

What is the maximum loan amount?

The maximum loan amount you can avail on your FD account depends on the amount of money you have invested in it. This is different from a personal loan where the loan amount will be determined by various factors such as your credit score, income and repayment schedule.

You can take a loan against your FD from your bank by visiting their branch or by filling an online application form on the lender's website. Once your application and documents are verified, the bank will issue you the desired amount of cash.

Why should you choose a loan against your FD?


The primary reason to opt for a loan against your FD is that it is hassle-free and easy to access. It is also one of the most secure types of loans, as you have already put in money into your FD account and it acts as collateral for the loan.

Another advantage of taking a loan against your FD is that you will not have to pay any penalty for prepayment of the loan. This is a common practice followed by banks, but when you opt for a loan against your FD, you do not have to pay a penalty for prepayment.

EMI calculation for a loan against your FD is not based on the original amount you have deposited in the FD, but the balance minus any withdrawals made. Hence, you can choose to repay the loan amount in installments or in a lump sum.

This loan is suitable for people who need a small, frequent amount and do not want to risk their FD account. However, this type of loan should be avoided if you have a large amount of money in your FD or if you do not want to have a shorter loan tenure.


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