Loan Against FD

Last Updated 31st Mar 2020

27th March 2020 – RBI cuts Repo Rate by 75 bps to 4.4%

Notice: MyLoanCare team is fully functional. You can apply and even get online personal loan disbursal from few banks.

Maximum Loan Amount Up to 90% of the deposit amount
Interest rate 1 to 2% above FD rate
Loan Tenure Up to 5 years
Processing Fee Nil
Prepayment Charges Nil Charges
  • No credit score check required to get loan against fixed deposit
  • Get upto 90% of the fixed deposit amount as loan
  • Loan against FDs are given in the form of overdraft
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What is Loan against Fixed Deposit?

In case of a financial emergency such as medical expenses or paying off for marriage, people tend to look out for loans from a lot of sources to meet their needs. One such source is loan against fixed deposits. Loan against fixed deposit is a secured loan where you can pledge your deposit as collateral and get a loan in return. You can get a loan amount of up to 90% of the deposit amount. A loan against FD doesn’t require you to break the deposit; instead, you can get a loan against it.

Who can apply for Loan against FD?

Loan against FD can be availed by anyone with a deposit account irrespective of income, occupation and credit score. The following people can apply for loan against FD:

  • All the fixed deposit holders, including individual holders or those with joint accounts, can apply for a loan against FD
  • FD, in the name of a minor, does not qualify for a loan against fixed deposits
  • Investors of 5-year tax-saving FD cannot apply for this type of loan

Benefits of Loan on Fixed Deposit

Loan against FD is independent of any occupation and can be availed by salaried and self-employed. You do not need to have a good credit score to get this loan. You can get the amount credited in your account in a few hours after applying. We have mentioned the benefits of loan against Fixed Deposit below:

  • Loan against fixed deposits are available at a lower interest rate as compared to other unsecured loans, such as personal loans
  • There is no processing fee charged
  • You are not required to break FDs and opt for premature withdrawal. This, in turn, saves you from incurring the loss of interest on FD
  • Loan is available against both domestic as well as NRI FDs
  • The amount taken as loan can be repaid in installment or as a lump sum (but not after your FD tenure gets expired)

Loan Limit in Major Banks

The below-mentioned table gives you an idea of the maximum loan limit in major banks:

Bank Loan Limit Interest Rate
SBI Bank Up to 90% FD Rate + 1%
HDFC Bank Minimum Rs. 25,000 FD Rate + 2%
Bank of Baroda Up to 95% FD Rate + 1%
ICICI Bank Up to 90% FD Rate + 2-3%
Citibank Up to 90% FD Rate + 1-2%
Punjab National Bank Up to 90% FD Rate + 1%
Axis Bank Up to 85% FD Rate + 2%

Advantages and Disadvantages of Loan Against Fixed Deposit

Advantages of Loan Against Fixed Deposit

  • Interest rate is low: Loan taken against fixed deposits is available at a lower interest rate
  • No processing fee: Most of the banks don’t charge any processing fee for a loan against a fixed deposit. In case banks charge a fee, it will be lower than the processing charge of other loans
  • Hassle-free application process: The processing for Loan against Fixed Deposits is easy and requires minimal documentation. The application form is processed fast, and not much paperwork is needed
  • No need to break FD: You are not required to break your FD. You will be getting interest in the loan tenure too
  • No CIBIL check: The biggest benefit of Loan against FD is that the financier does not check CIBIL record. Your FD account acts as a security, so any default will result in banks recovering money from the FD

Disadvantages of Loan against FDs

  • If a borrower fails to service the loan, the bank has the right to foreclose the fixed deposit to recover the money lent
  • The tenure of the loan given against the FD cannot exceed the residual tenure of the fixed deposit

A personal loan can be a better and cheaper option if you do not have a fixed deposit and need funds on an immediate basis.

What is Overdraft Facility on FD?

Banks give loan against FD as an overdraft facility to customers. Overdraft or OD limit backed by fixed deposit is lower than the deposit amount, and the interest charged is higher than the applicable FD card rate. However, the interest is only charged on the amount taken as overdraft and not on the entire limit.

FAQs

Can I take a loan against my fixed deposit?

Yes, you can take a loan against a fixed deposit.

How much loan can I get against my FD?

The amount of loan depends on the FD deposit amount. This can go up to 90% – 95% of the deposit amount.

What is loan on fixed deposit?

Loan against fixed deposit is a secured loan where you can pledge your deposit as collateral and get loan in return.

How does overdraft work on FD?

Loan against FD is given as an overdraft facility to customers. OD limit backed by fixed deposit is lower than the deposit amount.

What is the OD limit?

OD limit is the maximum amount that can be taken as a loan against your fixed deposit. It differs from bank to bank.

Is it good to take loan against FD?

It is a good option to meet your immediate financial needs. It is also available at a lower interest rate as compared to personal loans.

Can I get a loan against FD from State Bank of India?

Yes, you can get a loan against FD from SBI If you have a fixed deposit account in SBI. However, you can apply for a loan against FD from the bank you have a deposit account.

Why MyLoanCare???

Nowadays, almost all banks offer attractive schemes on Personal Loan at competitive rates with many customer friendly features. You can do rates comparison, check your eligibility, calculate EMI, apply online and get the best Personal Loan rates. MyLoanCare helps you throughout the loan process from the day you apply to the time you get disbursement. You can register with us, track your loan status on a regular basis and get an option to earn attractive cashbacks and refer and earn benefits.


Personal Loan News - Mar 2020
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