Managing your money, especially the liquidity, is one of the most important aspect of personal finance. Managing one’s cash flow needs a disciplined financial lifestyle with lots of wise and careful decisions. Ups and downs are the part of life and one should always be prepared for the worst. Managing liquidity, savings and investment all are the steps which lead you to a better financial future. There can be a sudden requirement of money and in case if you don’t have borrowing and selling your assets is the only option left in this case. But if you have any saving or investment you can be relaxed at the time of requirement and you can manage it efficiently.
However, if you use smartly, traditional bank’s fixed deposits can come to rescue and help you. Many Banks offer personal loans against fixed deposits. By using FDs against a personal loan one can raise short-term money without breaking a fixed deposit (FD). Another advantage that the borrower enjoys is the low interest rate as compared to any other personal loans.
Anyone can easily get a loan against their FD even if they don’t have a good credit score or even if they don’t meet the eligibility criteria to have a Personal Loan. One of the main advantages of having a Fixed Deposit is that, it comes with an overdraft facility. Most of the bank are ready to give a personal loan against your term deposit or fixed deposits by using it as a collateral or security.
This facility is not only limited to loan, the interest rate charged against your loans which is taken against your FDs is comparatively less as compared to that of traditional loans such as personal Loans or any other loans where the interest rate charged are comparatively much higher.
Fixed Deposits are one of the most popular types of investment options to the people because it offers growth of your money along with several other advantages. Banks in India which offers loans against FDs including are- State Bank of India, HDFC Bank, ICICI Bank and Axis Bank and many more. Loans against FDs can be availed both on domestic as well as on NRI FDs.
Benefits of Loan Against FD
- Low Interest Rate
It is much more affordable to take a loan against your FD. This is suggested because the interest rate charged against your loan will be you will be at much cheaper than other loans. if the interest is low it will directly reflect in your EMIs which will be low for sure as compared to any other personal loan.
- No Processing Fee
Many banks don’t charge any kind of processing fee for a personal loan against your FD but if charged it will be lower than the processing charge of other loans.
- Hassle-free Application Process
The processing for Personal Loan against Fixed Deposits needs less time along with less documentation. The application form is processed fast and not much paperwork is needed. The whole process is carried in a smooth and hassle free manner.
- No Need to Break FD
The best part of Loan against FDs is that you don’t need to break your FD. You will be getting interest in the loan tenure too. So, it’s always a better option to go for a personal loan against your FD than any other personal loan as here you can get interest along with the loan.
Features of Loan against FD
Loan Amount- The loan amount depends totally on the FDs amount. It can be maximum to the maturity amount of the FD.
Loan Tenure- The loan tenure can be maximum up to the tenure period of FD. The tenure period for which the loan is taken that should be ideally same as the tenure period of the FD. But it is possible to take a loan for a tenure which is less than the tenure of the FD.
Eligibility- Anyone having a FD is eligible the thing required is he/she should have an account holder either single or joint.
Interest Rate- Generally 2-3% higher than the FD rate.
Processing Fees- 0 to 1% depends on the lender.
Collateral– Your Fixed deposit.
Very few documents are required to avail personal loan against FDs. This is because as the borrower is an already existing customer of that particular bank hence they have the applicant information in advance.
it’s a matter of fact that availing a Personal Loan against Fixed Deposits are always beneficial. If you are in a need of Personal Loan and you have FD, go for a Personal Loan against your FD. By doing this you will be getting interest on your FD along with a loan at low interest rate.