Understand the pointers of Loan Against Fixed Deposits

What are Fixed Deposits?

It is the preferred source of investment for most Indians, who look forward to earning high-interest rates as compared to a standard savings account.

What is new in Fixed Deposits?Loan against fixed deposits

One can take Personal Loan Against FD is the key feature of this investment scheme. It is the framework that comes at the lowest interest rates as the bank has the protection of the Fixed Deposit against which the loan is taken.

Benefits of Loan Against Fixed Deposits:

  • Advantage of Unsecured Loans: It is the best option as it is available with an unsecured loan with lots of advantages.
  • Lowest Rates of Interest:  Personal Loan Against FD contains the lowest FD Rates the traditional personal loans. Interest rates for personal loans vary from 1to 2% higher than the rates offered by the bank for FD.
  • No need to Liquidate: In such type of loan, one will not need to liquidate the Fixed Deposit for which the lesser rates of interest were broken in the midway. In this way, the asset remains as it is while the urgent financial requirements are met.
  • Ability to extend the longer tenure period: The tenure for the loan against fixed deposits can extend up to the maturity of the FD
  • No hassles for processing: The process for Loan processing is hassle-free as the bank where you have FD is itself is providing the loan against it.
  • No Prepayment Penalties: No prepayment penalties are available for such kind of loans. This allows the freedom to the borrower to repay whenever his cash flow improves.
Documentation for Fixed Deposits:

The process is very easy and fast for this loan. Here are some of the documents that are appropriate for this loan:

  • Demand Promissory Note
  • Pledge/Lien Letter
  • Loan Documents
  • Overdraft Agreement
  • Application Form
  • Deposit Receipt
  • Signed Receipt

There is a very small fee for processing that is paid for loan approval by the bank. It takes very little time for this credit to be sanctioned. It is desirable to take a loan against FDs that are closer to maturity in most situations, as the amount reached would be greater.

Some of the banks offering personal loan against fixed deposits are:

Special Note: An individual must examine the whole EMI amount payable to the lender with the Personal loan EMI calculator.


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