Loan against Fixed Deposit

Whenever you have some lump sum money you want to investment it and want to grow it. Most of us want to invest the money in a safe and secured investment tool where you will get higher returns on your investment. People look for various options and investment tools to grow their money and earn more benefits. Investing in Fixed Deposit to gain more profit is because of fixed deposit interest rates is very common . Due to assured returns, no market risk and flexibility in the form of tenure and withdrawal it makes it more preferred among the people.

FD @ 8.00%* Rate

Whenever you are in urgent need of money and in case you don’t have enough contingency funds to meet the financial requirement in that case you look forward to borrow a loan from any bank or non banking firms to avail loan. Do you know that you can avail loan against your fixed deposit amount? Yes, If you don’t want to break your fixed deposit, but you are in urgent need of money you can avail a loan on your fixed deposit to meet your financial urgency. What are the benefits will you get if you will avail loan on fixed deposit? How does it work and what are the conditions? Let’s find out more about fixed deposit and the terms and conditions related to it.

How can you borrow the loan on your fixed deposit?

You can borrow the loan against fixed deposit in the form of overdraft against your deposited money with the bank. This is an alternative, which is offered to you by the bank instead of breaking the deposit prematurely.

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How much loan can you avail on your fixed deposit?

Most of the banks offer you a loan between 70% to 90% of the deposited amount. However, there are some banks, which offer more than this range. There is no upper limit or maximum amount of loan that can be offered by any bank. This totally depends upon the discretion of the bank. The percentage of amount varies from bank-to-bank and depends upon your deposited amount as well.

Rate of Interest

The interest rate charged by the bank on the loan against the fixed deposit is generally 2% to 2.5% above the interest paid by the bank on the deposit. However, this also varies from bank-to-bank.

Processing Fees

While offering the loan against the fixed deposit banks do not levy any kind of processing fee unlike the personal loan or any other loan. But, it may be some banks charge low fee for the loan.

Loan duration and payment procedure

The maximum loan tenure offered by the bank for loan against the fixed deposit is term of deposit itself. In this loan as well, the repayment process can be similar to the home loan where you are supposed to pay the EMIs on regular basis or decided by the lender.

Foreclosure of the loan

Generally banks do not charge any penalty or extra charges in case of foreclosure on the loan against fixed deposit.

So, it is clear that fixed deposit is a great option for those who want to avail the loan at a very affordable rate of interest as compared to higher rate of interest of personal loan. The rate of interest of personal loan ranges from 14% to 30% per annum. Besides, in fixed deposit you will earn interest on the deposited amount till the whole tenure of the fixed deposit though you have avail the loan against it. But, you should remember that you can’t break or close the fixed deposit after availing the loan on account of ‘right to lien’ clause of the bank. There is one more clause that if you will avail the loan against fixed deposit you will not get any kind of tax benefits or deductions for interest paid on this loan.

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Personal Loan Interest Rates September 2023
Fullerton India12.00% - 24.00%
HDFC Bank10.75% - 14.50%
ICICI Bank10.75% - 19.00%
IndusInd Bank10.25% - 26.00%
Kotak Bank10.99%
RBL14.00% - 23.00%
Standard Chartered Bank11.49%
Tata Capital10.50% - 24.00%
Home Loan Interest Rates September 2023
Axis Bank8.75% - 9.15%
Bank of Baroda8.50% - 10.60%
Citibank8.75% - 9.15%
HDFC8.50% - 9.40%
ICICI Bank9.00% - 9.85%
Indiabulls Housing Finance Limited8.65%
Kotak Bank8.85% - 9.40%
LIC Housing8.50% - 10.50%
Piramal Capital & Housing Finance10.50%
PNB Housing Finance8.50% - 10.95%
Reliance Home Finance8.75% - 14.00%
State Bank of India/SBI9.10% - 9.65%
Tata Capital8.95% - 12.00%