Have a low credit score? Pledge your fixed deposit as security against loan

The benefit of a loan against FD is that it has a lower interest rate

Bindisha Sarang | New Delhi
Last Updated at December 8, 2019 21:32 IST

retail loans

The interest rate is attractive and obtaining it requires minimal paperwork

Loan against FD (fixed deposit) is a secured loan where you can pledge your FDs as security.
The loan amount is usually up to 90-95 per cent of the deposit amount.
Both individual and joint account holders can get a loan against FD.
Investors in five-year tax-saving FDs cannot apply for it. Also, you cannot get a loan against an FD that is in the name of a minor.
Lenders do not check the credit score of the borrower when he applies for a loan against FD, which means even those with a low credit score can get this loan.
The benefit of a loan against FD is that it has a lower interest rate, requires minimal paperwork, and there is no prepayment fee.

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