Whenever a person faces a financial emergency and immediate funds are required, there are generally two options at hand. The first option is taking a loan from any financial institution and the second option is dipping into one’s savings. Did you know that you can take a Loan against Fixed Deposit? There are several benefits of taking a loan against FD and it can bail you out of a financial crisis. Also, this option will be cheaper in comparison to credit cards or personal loans.

You can get a loan up to 90% of the fixed deposit investment amount. The loan interest rates will only be 2-2.5% higher than the interest rates offered on the fixed deposit. There are minimal processing charges and no prepayment penalties as well.

To take an example, suppose you have a Fixed Deposit investment of Rs.10 lakhs at an interest rate of 8%, you can get a loan against FD of Rs.9 lakhs at an interest rate of 10-10.5%. The loan tenor will not surpass the tenor of the Fixed Deposit as well. The biggest benefit on offer is that even though have taken a loan against your FD, you will continue earning interest on it. In case of any emergency, do not break your Fixed Deposit but take a loan against it instead!

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