Under financial crisis applying for loan against fixed deposit is one of the best option. Loan Against Fixed Deposit is also known as secured loan. It is one of the best way to get borrowing. Instead of closing your fixed deposit prematurely you can go for loan against fd. You can get around 90-95% of deposit amount as loan. If you have money crisis you should consider secured loan option. Here is complete information about secured loan (Loan against fd).
Benefits of Loan Against Fixed Deposit
Minimum or No Paperwork – Loan against fixed deposit can be given with minimum or no paperwork. Bank already have your details including documents such as income proof, residence proof, Income tax return detail etc.
Lower Interest Rate – Fixed deposit act as a security for your loan. In case you are unable to pay loan the fixed deposit amount can be used for paying loan amount. The interest rate on these type of loan is lower compared to personal loan. The EMI Payable on loan against FD is low.
Fast processing – The processing of loan against fd is very fast. Bank will not check for your credit score or income documents for giving loan. You can get loan within one or two days. Few banks provide online option for availing loan.
No Prepayment Penalty – In case you have taken personal loan you need to penalty in case you do prepayment. In case of loan against fixed deposit you need to pay any penalty for the prepayment made by you.
Loan based on Fixed Deposit amount – Loan amount in case of loan against fixed deposit depends upon fixed deposit amount. Higher the fixed deposit amount means higher the loan amount. You can get around 90-95% of deposit amount as loan.
Who can apply for Loan Against FD?
Loan against FD can be applied for all fixed deposit holders. Individual or joint fixed deposit holder can apply for loan.
This loan cannot be applied if the fixed deposit is taken on the name of minor. These type of loan cannot be applied on tax saving fixed deposit.
Loan against FD can be taken by both salaried and self-employed regardless of their profession. You need not to have decent credit score or income document to apply for this loan.
Documents required for Loan Against FD
You need to provide following documents in order to get loan against fixed deposit.
- Application form
- Fixed deposit receipt duly discharged in the favor of bank
- Loan agreement acceptance
FAQ on Loan Against Fixed Deposit
(1) What additional charges to be paid to get loan against FD?
You need not to pay any additional charges such as processing fees to avail loan against fixed deposit. Interest rate is decided by bank.
(2) Can Minor gets loan against fixed deposit?
No, Loan against fixed deposit cannot be given to minor. This loan is given only to the person with age 18 years and above.
(3) What happens in case I am unable to pay my EMI?
If you fail to pay EMI for few months, the bank will use FD amount to make loan repayment.
(4) Can I get loan against FD on FCNR deposit?
You can get loan against FD on FCNR deposit. This loan can also be given on NRE and NRO deposit.
(5) Can I get this facility online?
Only few banks provide facility of getting this type of loan online. You may need to visit bank physically in order to get this loan.
Over to You
If you have fixed deposit and you have urgent need of money, you should opt of loan against FD. Loan against fixed deposit has multiple benefits compared to normal loan. You can get loan quickly and even interest rate is lower.