If you’ve got a Fixed Deposit account and the maturity date is far away, you can use a secured loan to meet your current financial needs by taking a loan against the Fixed Deposit account.
Many banks in India offer loans against your Fixed Deposit account. These are commonly referred to as demand loans or overdraft against deposits.
Why Should you Take a Loan Against Fixed Deposit?
Everything you should know about the loans against fixed deposit and below are a few benefits of taking a loan against your Fixed Deposit account:
- Taking a loan against your Fixed Deposit helps you get short-term money for any immediate financial needs without having to break the Fixed Deposit. Breaking the Fixed Deposit before maturity involves a penalty and loss of money.
- A loan against your Fixed Deposit account is called ‘secured’ because of the funds lying in your Fixed Deposit account. Because of this, you’ll get loans at a very low-interest rates when compared to a personal loan.
- You’ll get a loan amount that is 90% of your Fixed Deposit amount.
- The loan amount can be accessible via cheques and even ATMs and online banking.
- You can take loans for any tenure even as long as your Fixed Deposit tenure.
- If you aren’t able to repay the loan then the amount is adjusted with your Fixed Deposit sum. This can be a huge relief.
How to Apply for a Loan Against Fixed Deposit?
Once you’ve decided to take a loan against your Fixed Deposit account all you have to do is fill a form and submit your Fixed Deposit receipts with the bank. After this your bank will approve the loan and the amount will be credited to your account.
Points to Remember:
- You will granted a loan against your Fixed Deposit account only if it’s free from lien, restraint or encumbrance.
- The account can not be in the name of a minor.
- In the case of a joint Fixed Deposit account, all the account holders must sign the loan documents. The liability to repay the loan will be will be on each one’s shoulder.
- You’ll continue to receive the interest rates on your Fixed Deposit account.
- Repayment structure of the loan amount can be in the form of EMIs.
This is why taking a loan against your Fixed Deposit account makes a whole lot of sense that going for a personal loan to meet your immediate financial needs. It’s convenient, easily accessible, and if you’re incapable of repaying the loan amount your assets won’t be in danger.