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

Effective interest rate comes to 1-2.5 per cent

Topics
loan against FD

Tinesh Bhasin 



money, cash, rupees

  • 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 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 Interest is charged only on the amount withdrawn and for that specific period until the depositor repays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

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First Published: Fri, October 04 2019. 12:29 IST

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