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All You Need to Know about Personal Loan against Fixed Deposit

By Finserv MARKETS - Feb 26,2019
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All You Need to Know about Personal Loan against Fixed Deposit

Effective planning is required to manage your finances and increase your savings. An increase in the standard of living and lifestyle changes can cause a shift in expenditure, which is why liquidity should be managed well. Also, it is possible that you might exhaust a majority of your savings on unforeseen expenses and other emergencies. In such cases, selling your financial assets is a dependable option. Those without financial security can avail a personal loan during circumstances that require immediate funds. A Personal loan can also be borrowed for various other purposes such as meeting marriage-related expenses, paying for children’s education, purchasing, household appliances, going on vacations, renovating your homes and more. Since there’s no financial security mortgaged for a personal loan, the interest rates for such loans are higher compared to other type of loans.

However, you can enjoy a personal loan at a lower interest if you have a fixed deposit in a bank. Personal loan against fixed deposit is provided by many banks. Without breaking the fixed deposit, you can avail a personal loan against FD.

Some advantages of personal loan against FD have been outlined below:

  • A personal loan against fixed deposit can be procured easily and is not dependent on your credit score. A fixed deposit is a common investment tool for many due to its overdraft facility. A personal loan does not require security, plus, the fixed deposit can be used as collateral, thereby giving you a chance to enjoy lower interest rates on personal loan.

  • Usually, there’s no processing fee for personal against FD. In case some banks charge a processing fee, however it is way lesser compared to other type of bank loans.

  • An application for Bajaj Finserv personal loan against FD is processed quickly as there are fewer documents required for existing customers. The loan processing with FD is much more convenient than other loan applications.

  • As mentioned earlier, a personal loan can be availed without breaking the FD. You can enjoy interest on FD even during the loan tenure.

Let us have a look at some of the major differences between a personal loan and loan Against FD

Parameter Bajaj Finserv Personal loan Loan Against FD
Loan amount Up to Rs. 25 lakhs Up to 90% of your FD amount
Loan tenure From 12 months to 60 months Till maturity of FD
Documents required
  • Aadhaar Card/Passport/Driving License
  • PAN Card
  • Last 3 months’ bank statement
None
Interest rate 12.99% p.a- 15.50% p.a. A high credit score can help you avail a competitive interest rate 2-5% higher than return rate on FD
Processing fee Up to 3.99% of the loan amount None
Foreclosure charges 4% of the outstanding loan amount None

Before you apply for a personal loan, you must check your loan eligibility with the help of a personal loan eligibility calculator. This will give you a fair idea regarding whether your personal loan will be approved or not. Also, you must compare various lenders before availing a personal loan. This will help you avail a personal loan that best suits your needs.  Always settle for a financial institution that offers competitive interest rate. Personal loan available at Finserv MARKETS come with attractive interest rate and other features such as flexible loan repayment option, less processing fee, no hidden charges, instant approval and quick disbursal of the loan amount. Also, if you have a high credit score, you can negotiate with the lender to get even more attractive Bajaj Finserv Personal Loan interest rate .

To avail a personal loan against FD, all you need is a single or joint fixed deposit account in a bank. The bank will sanction the personal loan amount based on the maturity amount of your FD. So, here your FD amount is the deciding factor of your loan amount. The loan tenure will be proportional to the tenure of your FD.  But you can always opt for loan tenure shorter than the actual FD tenure. The fixed deposit will be considered as collateral and the interest rate will be 2% to 3% more than the fixed deposit rate. If charged by the bank, processing fee will be 1 percent.

Before applying for a Bajaj Personal Loan against fixed deposit, make sure there’s no existing lien on the fixed deposit. Also, minors should not be the account holder of fixed deposit you wish to use against a personal loan. Check the personal loan eligibility before applying. In case of joint fixed deposit, both the account holders will have to process loan documents. Also, both of them share equal responsibility to repay the loan.

Overall, personal loan against fixed deposit is a great tool to raise funds during crisis. But keep in mind that it’s ideal to apply for short-term loans. If you fail to repay the loan amount, the bank forecloses the fixed deposit for loan recovery.  Although availing this type of loan is not reliant on a good credit score, your inability to repay the loan will reflect on your credit score. This will showcase on your CIBIL report, which in turn affects your future loan applications, if any.

Just in case if you have a low CIBIL score you can also learn on how you can apply for a personal loan with low CIBIL score.

“Finserv MARKETS, from the house of Bajaj Finserv is an exclusive online supermarket for all your personal and financial needs. 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