How to take a loan against your fixed deposit?

We usually book fixed deposits when interest rates are high, but, at times we may need money for an emergency, which could repaid back. In case of such an emergency, you can pledge your fixed deposit and avail of a loan.

You can get upto 90 per cent of your deposit amount as loan. One can go for this instead of personal loan. There is no need to break the fixed deposit.

To avail the loan one has to visit the bank and fill the necessarry application.

Interest rate

Interest rates are usually higher by 2 to 3% higher than your bank fixed deposit rate. However, it varies from bank to bank. Consider your fixed deposit interest rate is 9%, your loan interest rate will around 11%-12%. Here, you are paying only 2%-3% more.

Tenure

Tenure of the loan depends on the maturity of the fixed deposits. If the amount is not paid until the maturity, loan amount will be adjusted towards the fixed deposits.

Charges

Banks usually do not charge any processing charge on this as there is no risk involved. However, some banks may charge you a marginal amount.

Why is it better than personal loan?

Banks charge high interest rate on personal loan between 16-25% depending on the bank and the loan amount. Also, it comes with some percentage of processing fee. Where as, loan against fixed deposit will be around 11%-12%. Hence it is better to go for loan against fixed deposit when in need of short term money.

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