One of the best features of a loan against FD is that your credit score is not taken into consideration. If you have a low credit score or no credit history, a loan against FD can help you overcome financial emergencies. This type of loan does not require a credit check and doesn’t require a large deposit to qualify. However, there are a few things to keep in mind before you apply.
One of the main differences between an FD loan and an overdraft is that you are not paying interest on the whole amount. The bank may charge you as much as 2% to 3% of the amount you’ve withdrawn. However, a loan against FD is significantly lower than an ordinary car loan, which can cost upwards of 12%. If you don’t want to pay this high interest rate, an FD loan may be a great option.
Another difference between a loan against an FD and a personal loan is the interest rate. While personal loans typically charge interest rates ranging from fourteen to thirty percent per annum, a loan against an FD earns you interest while you repay the loan. It’s not difficult to see why a loan against an FD may be the best option if your FD is already worth more than you need it to be.
Another benefit of a loan against FD is its time-saving nature. The process of getting a loan against an FD requires minimal paperwork. Since the lender already knows your FD details, you’ll only need to sign the loan agreement and discharge your FD receipts. Interestingly, the loan against an FD doesn’t have any credit requirements, so even if your CIBIL or CLBIL score is below par, you can still get approved.
The cost of a loan against an FD is significantly cheaper than a personal loan. And a loan against an FD is also available at a lower interest rate than most unsecured loans. In addition, your credit score won’t be affected if you default on the loan against an FD. So, why not take advantage of the benefits? There are many benefits to getting a loan against an FD.
Banks also offer flexible repayment terms. Overdrafts against an FD can be as high as 90% of its value. Banks also allow borrowers to use up to 2% more than the underlying FD rate. Since the interest on the overdraft facility is calculated daily, it’s easy to use an overdraft against an FD to meet a short-term cash demand. There is no monthly EMI to worry about – you can simply deposit the outstanding amount whenever you need cash.
Taking a loan against an FD doesn’t require a credit check, and banks don’t charge penalties for early repayment. It’s a quick and easy process – you can apply online and get the money you need. But you should be aware of the terms and conditions before applying. For example, if your FD is worth Rs 10 lakh, you can take a loan against it up to Rs 9 lakh if you have a balance of that amount. Besides that, the interest rate on a loan against an FD is generally one to two percentage points higher than the FD’s interest rate.
