Here's how you can get a loan against your fixed deposit

Due to the ongoing pandemic, people have mostly exhausted their savings as there have been unprecedented job losses and salary cuts. Often, cash crunch makes us look for different avenues for loans. We tend to borrow money either from our near and dear ones or from the bank if the requirement is for a specific purpose. But do you know that you can also get a loan against your fixed deposit?

It is a short-term secured loan that can fulfil all emergency needs. You can borrow against fixed deposit either by taking a loan or through an overdraft facility. To get a loan against your FD, prematurely breaking the FD is not needed. You can take the loan up to 90-95% of the amount deposited.

Can you apply for this facility?

If you are an individual FD account holder or a joint FD account holder, you can apply for a loan against the amount deposited.

To get the benefits of this facility, an individual should be above 18 years of age.

If you are an investor of a 5-year tax-saving FD then you are not eligible to apply for this facility

Process

Firstly, while applying for this facility, breaking FD prematurely is not needed.

Secondly, the loan amount can be repaid in installments or in a lump sum, within the tenure of your recurring Fixed Deposit.

Thirdly, you can get the loan at lower interest rates with minimal documentation and absolutely no processing fee.

Lastly, you can avail loans on both domestic and NRI FDs.

Apart, from its benefits, there are a few minor cons that come while availing this facility. In case, the borrower fails to repay the loan amount, the FD can be foreclosed by the bank. Although the bank doesn’t levy any penalty or additional charge in case of foreclosure. As explained above, the tenure of the loan cannot exceed the tenure of the FD.