Welcome to FundooMoney, your 24X7 buddy for all your money matters. You are in urgent need of large amount cash and want to avoid using credit card since you may not be able to repay within the payment cycle. You also do not want to pay high interest for the outstanding balance. Same is true for other costly loans such as personal loans. In such circumstances, taking a loan against a fixed deposit (FD) is one of the lowest cost loan options. Just in case you are wondering how to go about it, we provide a roadmap in just a little while.
Here are five things you must know about loan against FDs.
• You can take a term loan or an overdraft of up to 90% of the principal amount.
• Tenure of the loan would not be more than term of the FD but maximum tenure is typically of 3 years.
• The interest rate charged for the loan against FD is typically 1-2 percentage points more than the FD interest rate. So, for a FD paying 8% annually, the interest rate for the loan against FD would be 9-10%.
• A lien would be marked on your FD to prevent its withdrawal till the loan is repaid.
• Generally banks provide loan against FD only for FDs from their own bank.
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