Loan Against Fixed Deposit Interest Rate | Loan Against Fixed Deposit Calculator SBI | Fixed Deposit Eligibility | Student Loan Against Fixed Deposit
Now a day’s people seek loans from different sources in order to satisfy their needs in the event of a financial emergency, like wedding debt or medical expenditures. Loans secured by fixed deposits are one such source. Loan Against Fixed Deposit is a secured loan that allows you to use your deposit as collateral in exchange for a loan. You may be eligible for a loan of up to 90% of your deposit. You are not needed to break your FD to acquire a loan against it. However, you can borrow against it.
Top Banks That Provide Loan Against Fixed Deposit
|Name of the Bank||Interest Rate||Loan Amount|
|Axis Bank||2% above term deposit rate||Rs.25,000 onwards|
|State Bank of India||1% above the relative FD rate||Rs.25,000 to Rs.5 crore|
|HDFC Bank||2% above the FD rate||Up to 90% of your fixed deposit|
|Federal Bank||2% above the FD rate||Up to 90% of the deposit amount|
|Karur Vysya Bank||5% to 7%||Up to 90% of the deposit amount|
|Deutsche Bank||2% above the FD rate||Rs.25,000 onwards|
Eligibility Criteria for Loan Against Fixed Deposit
Anyone having a deposit account, regardless of income, occupation, or credit score, can apply for a loan against their FD. The following individuals are eligible to apply for a Loan Against Fixed Deposit.
- Any fixed deposit holder, whether an individual or a joint account holder, can request for a loan against their FD.
- A loan against fixed deposits is not available if the FD is held in the name of a minor.
- This form of loan is not available to investors who have a 5-year tax-saving FD.
Advantages of Loan Against Fixed Deposit
Loans against FD can be taken out by both salaried and self-employed people, regardless of their occupation. To qualify for this loan, you do not need to have an excellent credit score. After you apply, the money will be credited to your account within a few hours. The following are the advantages of borrowing against a fixed deposit:
- When compared to other unsecured loans, such as personal loans, loans against fixed deposits have a lower interest rate.
- There is no payment for the processing.
- Breaking FDs and opting for premature withdrawal is not needed. This, in turn, prevents you from losing interest on your FD.
- Both domestic and NRI FDs can be used to secure a loan.
- The loan amount can be paid back in installments or in one lump sum (but not after your FD tenure gets expired).
Loan limit in Major Banks
The table below offers you an idea of what the maximum loan limit is in major banks:
|Bank||Loan Limit||Interest Rate|
|SBI Bank||Up to 90%||FD Rate + 1%|
|HDFC Bank||Minimum ₹ 25,000||FD Rate + 2%|
|Bank of Baroda||Up to 95%||FD Rate + 1%|
|ICICI Bank||Up to 90%||FD Rate + 2-3%|
|Citibank||Up to 90%||FD Rate + 1-2%|
|PNB||Up to 90%||FD Rate + 1%|
|Axis Bank||Up to 85%||FD Rate + 2%|
Benefits of a Loan against a Fixed Deposit
- The rate of interest is low: The interest rate on a loan secured by fixed deposits is lower.
- There is no processing fee: For a loan against a fixed deposit, most banks do not impose a processing fee. If banks charge a cost, it will be less than the processing fee for other types of loans.
- Effortless application process: Loans against Fixed Deposits are simple to process and require little documentation. The application form is processed quickly, and there is minimal paperwork required.
- There is no need to break FD: It is not necessary for you to break your FD. You will be charged interest throughout the loan term.
- The major advantage of a Loan against FD is that the lender does not check your CIBIL score. Because your FD account serves as a security, banks will be able to collect funds from it in the event of a default.
Drawbacks of Loan against FDs
- If a borrower defaults on a loan, the bank has the authority to foreclose on the fixed deposit in order to recoup the funds lent.
- The term of the loan secured by the FD cannot be longer than the fixed deposit’s remaining term.
- If you don’t have a fixed deposit and need money right away, a personal loan may be a better and less expensive option.
What is FD’s Overdraft Facility?
Customers can get a loan against their FD as an overdraft from banks. The fixed deposit-backed overdraft or OD limit is less than the deposit amount. Also, the interest paid is more than the appropriate FD card rate. However, interest is only levied on the amount borrowed as an overdraft, not on the total amount borrowed.
Yes, a fixed deposit can be used to secure a loan.
The loan amount is based on the amount of the FD deposit. This can be anywhere between 90% and 95% of the deposit amount.
A secured loan against a fixed deposit is one in which you pledge your deposit as collateral and receive a loan in exchange.
Customers can get a loan against their FD as an overdraft. The deposit amount is less than the OD limit secured by a fixed deposit.
The OD limit refers to the maximum amount that can be borrowed against a fixed deposit. It differs from one bank to another.
It’s a viable choice for meeting your immediate financial requirements. In comparison to personal loans, it also has a reduced interest rate.
Yes, you can acquire a loan from SBI against your FD. If you hold an SBI fixed deposit account, you can, however, request a loan against your FD with the bank where you have a deposit account.