Everything you’d ever want to know about Loans Against Fixed Deposits
After determining your requirement for a loan, the next big question is which type of loan should you apply for? There are a variety of loans available on the market and the key to having a smooth loan experience is figuring out the one that suits you the most. One of them is a loan against fixed deposits.
Before delving into loan against fixed deposits, let’s grasp the basics of a fixed deposit. A fixed deposit (FD) is basically a financial instrument provided by banks, which gives the investors a higher rate of interest than a regular savings account, until the given maturity date.
A loan against fixed deposit is basically a way to procure a mortgage against your existing fixed deposit with the bank. Basically, instead of asking for collateral, the lender provides you with debt against your FD in the bank.
Loan against fixed deposits in India have gained considerable popularity in the country owing to their easy accessibility and low interest rates. If you’re looking to overcome a lack of funds yourself, then opt for the loans against FDs offered by Bajaj Finserv.
Loans against fixed deposits are the ideal selection for when you are in need of short-term funds and don’t want to apply for a regular personal loan. Let’s evaluate the functioning of loans against fixed deposits and check if they’re worth the trouble.
How Does it Work?
The importance of managing financial liquidity cannot be emphasised enough. You might face an unexpected demand for cash and unless you make a concentrated effort to keep a steady flow with yourself, chances are you will require a quick fix with a short-term loan. The biggest advantage is that you don’t have to break your FD with the bank to procure the loan. You can opt for a relaxed repayment method and pay back the loan over a period of time.
What is the Loan Against Fixed Deposit Interest Rate?
Another advantage associated with loans against fixed deposits is that the interest rate for this form of debt is generally lower than your usual loan. For loans against fixed deposit, banks usually charge an interest rate that is 1-3% lower than what the bank is offering you for the FD. This saves a lot of money which otherwise would have been paid as interest had it been a traditional personal loan.
Bajaj Finserv offers you a personal loan against fixed deposit at 2% above your existing FD rate. You are also not charged any amount if you decide to prepay part of your loan or foreclose it entirely.
Why Loan Against Fixed Deposit?
A personal loan against FD is easy to obtain and the process should ideally takes less than a day. The individual has to submit an application form, fixed deposit receipts, and other documents such as a lien letter and overdraft agreement as notified by the bank. There is also no prepayment penalty charged by most banks on the repayment of personal loans against FD. Bajaj Finserv for instance, offers loan against fixed deposit with nil part prepayment and foreclosure charges.
Certain financiers provide home loans against fixed deposits so that you can finance your next home using your existing FD. Apply online for a loan against fixed deposit by Bajaj Finserv and avail offers like easy account access and guaranteed approval.