Whenever we have an abundant sum in hand, fixed deposit is the financial product that most of us think of having. Fixed deposit is one of the most popular investment instruments as it provides a host of benefits like ease of investment, guaranteed returns, flexibility in investment terms and more.
Often, in case of emergencies, we look for loans from various sources. Loan against fixed deposit is a very convenient way to secure a loan without getting hassled by lengthy documentation process and other time-consuming formalities. Let’s see how it works.
Loan Against Fixed Deposit
Loan against FD account is a secured loan given in the form of an overdraft against the amount deposited. You have to submit your FD as collateral to avail this loan.
This is an alternative you can use instead of breaking the fixed deposit prematurely in case of any financial emergency. The tenor for your FD has to be the same as your loan tenor, and you have to repay the loan within the maturity duration of your fixed deposit.
Benefits of availing Loan Against FD
- Since these are secured loans with your FD as collateral, the rate of interest is less as compared to other loans.
- You don’t have to break your FD and incur a loss of interest. You can meet your immediate cash requirements while allowing your FD investments to continue to grow. You keep earning interest on your FD even after availing the loan.
- You can easily calculate your earnings by using online FD calculator and plan your expenses accordingly.
How can you avail it?
To apply for a loan against a fixed deposit, you have to submit these documents.
- Application form
- Receipt of fixed deposit
- ECS mandate (only for non-cumulative FD)
- Canceled cheque (only for non-cumulative FD)
You cannot close or break the fixed deposit after availing the loan on the account as per norm without any tax benefit or deduction.
Loan Against Fixed Deposit from Bajaj Finance
Bajaj Finance Fixed Deposit (FD) provides you with a lot of benefits not only on your FD investments but also on loans. Its FD interest rates are one of the highest in India- up to 8.75% for regular FDs and 9.1% for senior citizen FDs. Additionally; it also offers additional benefits on loans against fixed deposits, like
- High loan value – In case of a cumulative FD account, you can avail a loan up to 75% of the amount you’ve invested. You can get a loan of up to 60% of the amount invested for a non-cumulative account
- Quick processing without additional charges– It has a quick processing service. No extra charges are required for foreclosure or part-prepayments. You can fulfill your financial needs easily with a loan against fixed deposits.
- Minimal Documentation – It requires minimum paperwork to get guaranteed approval. Only single page documentation is needed.