With minimal risk at hand, fixed deposit scheme in India are one of the most common financial avenues that most prefer to invest in. A flexible tenure period, high rates of interest, and benefits for senior citizens—fixed deposits are a profitable investment with high returns.
Another lesser known benefit of FDs is the Personal Loan against fixed deposit that comes to your rescue in times of a financial crunch. You can avail a Personal Loan at a low rate of interest and do not have to worry about breaking the FD before its maturity period, tampering with the interest rates, or even pay a penalty.
Here are some of the benefits of a loan against a fixed deposit scheme for long term.
Benefits of a Loan against Fixed Deposit
More and more people are taking to a loan against FDs as an added benefit to the advantages of investing in a fixed deposit. Here are some reasons why.
- Interest Rates: When you apply for a Personal Loan against a fixed deposit, you are entitled to an interest rate that is quite low when compared to conventional Personal Loan interest rates
- Liquidity:These loans are easy to get and maintain in times of a financial crisis. In any case you find the repayment of loan against fixed deposit challenging, the bank will deduct the required amount from the principal amount itself
- Flexible Tenure Period: You can choose a tenure period as per your convenience that can last as long as the tenure period
- Hassle-Free Process: Since you’re already tied to the bank or NBFC through the fixed deposit, getting a loan is easier and requires a simple application process with minimal documentation
- Foreclosure: If you have an additional lump sum of amount and would like to close your FD under a shorter term, you won’t have to worry about an additional fee for the part-prepayment facility
How to Avail a Loan against Fixed Deposit
If you want to apply for a personal loan over your fixed deposit, the process is pretty simple and very similar to applying for a conventional Personal Loan. The process is only made simpler with banks and NBFCs provide an easy accessibility through online applications. Here are some simple steps to apply for a Personal Loan against your fixed deposit.
- Download and fill the online application form
- Submit the application form along with a copy of the FD receipt to the nearest lender branch
- Provide an ECS mandate and a cancelled cheque in case of a non-cumulative FD
Apart from this, you’ll also be required to submit documents like an overdraft agreement, loan documents, demand promissory notes, pledge letters, deposit receipt, and a signed receipt. With certain basic necessities like being a salaried individual and a resident of India, you are eligible to a Personal Loan against fixed deposits.
You can enjoy the additional benefit of a low rate of interest along with several others appended to a fixed deposit. However, you need to validate if a loan is a better option over breaking the FD, depending on your financial situation. A loan is a great option at the early stage of your fixed deposit as you can enjoy a long tenure period with low rates of interest. It’s essential to weigh the pros and cons and gauge your financial situation before applying for a loan against your fixed deposit.