Need emergency cash? Borrow against fixed deposit instead of liquidating it

Effective interest rate comes to 1-2.5 per cent

• During financial emergencies, instead of liquidating your investments, take a loan against them
• Among the most convenient and cheaper options is a loan against bank fixed deposit (FD)
• Banks charge interest rates of 1-2.5 per cent above the existing FD rate. Say, if FD is at 7.5 per cent. The bank would offer loan against FD at 8.5-10 per cent
• Banks don't check credit scores to lend against FDs, which makes it suitable for borrowers with a low credit score
• The documentation is minimum, there is no processing fees, and the FD continues to earn interest even during the tenure of the loan
• It also comes with flexible repayment terms. Interest is charged only on the amount withdrawn and for that specific period until the depositor repays
• The tenure of the loan is until the depositor’s FD matures and there are no foreclosure charges on prepayment or partial prepayment