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Can you get a loan against Fixed deposit?

By Finserv MARKETS - Aug 1,2019
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Can you get a loan against Fixed deposit

Mr Chopra wanted to reconstruct his house and was desperately looking for funds to help him start the process. He was not keen on borrowing from relatives nor breaking his deposits in the bank. Hence, he was perplexed as to what to do. Amit was happy that he had just finalised on a new flat in an upcoming neighborhood, however, he was worried at the same time since he was short of funds to pay the EMI. What both Mr Chopra and Amit were not aware of is that one can easily take a personal loan for such expenses against a fixed deposit from the bank.

Most people opt for premature withdrawal from their bank deposits to take care of emergency cash crunches which not only make them lose on the interest they could have earned. Moreover, it attracts a penalty thus eating into their savings. On the other hand, a loan against a fixed deposit is a fast and simple financing solution that lets you ride such unforeseen events without making a hole into your investments. One needs to pledge the bank deposit as collateral or security in return for the loan amount. The loan is given as an overdraft on the FD amount.

No hidden charges and prompt disbursement: A loan against Fixed Deposit requires minimal documentation, especially when you use a portal like Finserv MARKETS. There are no foreclosure or part-prepayment charges, to make the loan more affordable for you. Just download the form, fill it, submit your ECS mandate and a cancelled cheque if you have a non-cumulative FD at the nearest bank branch along with the Fixed Deposit receipt. Within 24 hours, a guaranteed loan is disbursed without any delay. Not only is the processing quick, but there are also no extra charges levied.

Affordable interest rate: Banks will grant a percentage of the FD amount as a loan. This can be 75% of the total amount for a cumulative FD and 60 per cent for a non-cumulative one as available on Finserv MARKETS. For instance, let us say you have a Fixed deposit of 10 lakhs, the loan amount will be 7.5 lakhs for a cumulative and 6 lakhs for a non-cumulative deposit. The interest rate on the personal loan taken will be 2 per cent more than the interest earned by your fixed deposit, which is quite affordable as compared to traditional loans in the market which have higher interest rates ranging from 14 to 30%. Getting a home loan can be even more difficult for those with a low credit score, that is dependent on the customers’ payment history, income profile etc. Which is where a loan as an overdraft against your Fixed Deposit can bail you out in a financial emergency.

Grow your money as you repay: Banks offer flexible repayment options ranging from 90 days from when you first invested in the FD to the remaining tenure of the deposit. The only condition being that the tenure of the loan cannot exceed that of the FD. Say for instance you have a deposit of 10 lakhs for a period of five years, so you cannot be taking more than five years to repay your loan. The best part is that your Bank Deposit continues to earn interest even as you repay your personal loan and your house is being renovated. Your investment grows as you service your loan.

In short, loan against Fixed Deposit, available on Finserv MARKETS, is a good substitute for those who don’t want to fall into the debt trap of a personal loan that comes with high-interest rates. A survey by RBI showed that the outstanding personal loan amount with banks increased from 5.89 lakh crore in May 2010 to 19.33 lakh crore in June 2018. Such unsecured loans create a burden on asset quality which could pose a problem when the economy is in a downturn.

As a wise investor, it makes sense to borrow what you can repay easily, and hence going for a secured loan is the way forward, in this case as an overdraft against your Fixed Deposit. You don’t end up in a debt trap and also continue to enjoy returns on your savings even as your financial needs are taken care of.

Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!


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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522