How to Use Your Fixed Deposit to Get a Car Loan
If you are one of the millions of Indians dreaming of being a car owner, the one thing stopping you from fulfilling your wish is probably a lack of funds. Here’s some good news: you can avail a car loan against your FD! Using fixed deposit to fund a car is more like having a loan against your fixed deposit, rather than going into the tedious process of actually applying for a loan.
How should you go about it?
The process is very simple. All you need to do is fill out a form for a car loan against FD and submit your fixed deposit receipt along with it to the bank or non-banking financial institution. You can avail up to 70 to 90% of the value of your deposit with only 2% to 2.5% over and above the interest rate contracted on your FD. This loan can only be availed with the lender you currently have an FD with. The tenure is only as long as the maturity period of your FD. Once that period comes to an end, you need to pay back the loan.
What are the benefits?
There are several benefits of having a loan against fixed deposit. Let’s take a closer look at them. First and foremost, the absence of any processing fees unlike the ones applicable when applying for an auto loan is a big advantage. Secondly, you can pre-pay or foreclose without any extra foreclosure or pre-payment charges. Thirdly, once you are done with all the formalities, you become the sole owner of the vehicle. Last but not the least, the whole process from start to end is simple and may be easily tracked online. The quick loan disbursal of this method will get you in the driver’s seat of your dream car in less time than you can imagine!
In contrast, if you decide to break your fixed deposit, you get less than the amount you were supposed to get originally, and also have to pay a penalty. Taking a loan against your FD or car loan against FD is a much better option and so is the procedure of obtaining it.
Additional Read : Loans Against Fixed Deposits – All You need to Know
Availing a separate loan from a bank, be it to purchase a car or another commodity, would require a lengthy procedure as well as an interest of around 10%-12% compared to the 2-2.5% interest you would have to pay by acquiring a loan against your fixed deposit.
Having studied the pros and cons of the different ways your FD can work for you, even while being locked in a bank, make your decision wisely and carefully.
To know more about loans against fixed deposits at Bajaj Finserv, click here: