Fixed deposits have been the apple of every investor’s eye for many years now. There are a number of reasons for this—the most prominent among them being the independence from market fluctuations. Apart from that, the key benefits of investing in fixed deposits include zero volatility, complete stability and a much higher interest rate for senior citizens. FDs also inculcate a habit of saving your money rather than spending it, as opposed to the modern financial methods like credit cards. And unlike the share market, fixed deposits are completely risk-free.
Although these are all the usual benefits of fixed deposits, there are also some that are relatively lesser-known. One such remarkable benefit is the option of using your fixed deposit to take a car loan. It’s simple, uncomplicated, and very easy-to-use. Just check if you’re eligible and apply directly. You can even do it online.
Need to buy a car? Don’t worry, your Fixed Deposit has your back
If you’re in the market for a car but worried about dipping into your savings or applying for a loan to fuel your dream, check out the following benefits of utilizing your Fixed Deposit to pay for it instead!
- The most important factor in your favour if you choose to use your Fixed Deposit for buying a car, is that borrowing against an FD is considered as an overdraft option in the world of car financing. This means that it isn’t even termed as a loan, since the money in your FD is yours after all. You’re just using it as security.
- Another beneficial factor is that the rate of interest charged from you is significantly lower than if you acquired a car loan. Since loans against fixed deposits are secured loans, you will be charged an interest merely 2% to 2.5% higher than the one you get on your FD. If you consider the average interest rate on fixed deposits to be around 8%, your car loan against fixed deposit will only be around 10 to 10.5%.
- Additionally, you won’t be charged any processing or miscellaneous fees if you use your fixed deposit. Therefore, you can rest assured with the fact that you’re only paying for what you bought.
- And if you’re someone who likes to be in control of the situation (and who doesn’t?), car loans against fixed deposit are your best bet. This is because where regular car loans are involved, the one who provides you with the funds is the legal owner of your vehicle. This means that if, due to unforeseen circumstances, you have to default, your lender can claim your car as their own. Conversely, in fixed deposit financing of your car, you continue to stay the one and only person in charge of the car. All that happens is the amount due gets withdrawn from your fixed deposit account.
- Even if you’re a cautious person who prefers to pre-pay your dues, fixed deposits are still your best friends. You can go ahead and pre-pay all the amount you want with no worries about having to cough up any pre-payment charges.