What is Loan against FD & RD?
Loan against FD (Fixed Deposit) is a type of secured loan where customers can pledge their fixed deposit as security and get a loan in return. The amount of the loan depends on the FD deposit amount. This can go up to 90% – 95% of the deposit amount.
Who can Apply for a Loan against FD & RD?
- Loan against fixed deposits is extended to all the fixed deposit holders, be it individual holders or those with joint accounts.
- FD in the name of a minor does not qualify for this facility.
- Investors of a 5-year tax-saving FD cannot apply for this type of loan.
Benefits of Loan against FD & RD
Some of the reasons why one should shift to a loan against FD & RD are mentioned below:
- Lower interest rates compared to other types of loans like personal loans (0.5% – 2% above the applicable FD rate)
- No need to break FD and go for premature withdrawal thus suffering a loss of interest on FD.
- No processing fees charged.
- Can be availed against domestic as well as NRI FDs
- Can be repaid as a lump sum or in installment (not later than FD tenure)
