Loan Against FD Disadvantages

A loan against a fixed deposit is a secured loan where you can guarantee your deposit as collateral and get a loan in return. In case of financial emergencies, such as household repairs and medical expenses, people tend to break their FD to meet their needs. As a result, the investment plan is hampered and the investor loses out on the interest income that he/she would have received on maturity.

By taking a loan against a fixed deposit, you can tend to your needs without hampering your FD investment. As compared to other loan options, a loan against FD has lower interest rates. You also do not need to pay any charges for processing and other taxes that might get levied on other loan options. Therefore, by opting for a loan against FD, you do not lose out on your fixed deposit. However, there are also a few disadvantages of taking a loan against a fixed deposit. Here is a look at it.

 Just like advantages, there are few loan against fixed deposit disadvantages too. Let’s have a look at those and understand it better.

• If you default on your loan against fixed deposit, the bank has the right to foreclose your fixed deposit and recover the money. Hence, you can lose out on the entire fixed deposit investment along with the interest income.

• The tenor of loan against fixed deposit cannot be longer than the remaining term of your fixed deposit investment.

• Breaking your fixed deposit investment would be a better option if you are unsure about repaying the loan amount in the remaining tenor.

With Bajaj Finance FD on Bajaj Markets, you do not need to split your fixed deposit for your immediate financial needs. You can avail a loan against your FD and get your money in 24 hours. Bajaj Finance FD rates are also one of the best available in the market. You can get interest rates ranging from 7.11% p.a. to 8.60% p.a. per annum. With flexible tenor and payout options, you can easily invest in a Bajaj Finance FD and grow your savings to achieve your financial goals. You can invest in a Bajaj Finance FD online on Bajaj Markets.