Need emergency cash? Borrow against fixed deposit instead of liquidating it

Topics loan against FD

  • During financial emergencies, instead of liquidating your investments, take a loan against them
  • Among the most convenient and cheaper options is a loan against bank fixed deposit (FD)
  • Banks charge interest rates of 1-2.5 per cent above the existing FD rate. Say, if FD is at 7.5 per cent. The bank would offer loan against FD at 8.5-10 per cent
  • Banks don't check credit scores to lend against FDs, which makes it suitable for borrowers with a low credit score
  • The documentation is minimum, there is no processing fees, and the FD continues to earn interest even during the tenure of the loan
  • It also comes with flexible repayment terms. Interest is charged only on the amount withdrawn and for that specific period until the depositor repays
  • The tenure of the loan is until the depositor’s FD matures and there are no foreclosure charges on prepayment or partial prepayment

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel