Right from ancient times, Fixed Deposits (FDs) has been the most popular secure investment option. You might have seen or heard people using the terms, ‘breaking FD,’ or ‘premature withdrawal.’ During emergencies, people used to make premature withdrawals or break their FD and use the required money. However, for doing so, financial companies ask for, and also you might lose some other benefits which could have been otherwise helped you in earning high returns. To eliminate the need for premature withdrawals, financial providers now offer the facility to take a loan against FD wherein you can use up to 70% to 90% of the accrued sum. The interest rates to be paid for the loan against FD are comparatively lower than that of standard loans. Almost all financial providers in India offer this facility to its customers for their convenience. Moreover, Non-Banking Financial Companies (NBFCs) like Bajaj Finance provides the facility wherein you can flexibly pay back the amount used as a loan from your FD.
Benefits of Availing Loan against FD
Quick Application and Processing
To avail Loan against FD, you can directly visit the website of your financial provider and apply. The conventional loan procedure involves rigorous procedures like application form, documentation, verification, and much more. However, when applying for a loan against FD, your financier already has all your necessary information. Due to this reason, applying for a loan against FD consumes much less time as compared to standard loans.
No Credit History Required
Many financial providers look for your financial health to offer loans to verify your ability to repay the loan. However, for a loan against FD, the financial provider would not require to verify your financial health as FD works as an asset for your loan approval. Fixed Deposit is kept as the security for any defaults. If you default in repaying the debt, the amount accrued in your FD account shall be seized by the financial provider.
As mentioned above, since your financial provider has all the required information and documents provided at the time of FD, you can avail loan against FD with minimal documentation. NBFCs like Bajaj Finance offers single-page documentation facility with guaranteed approvals without any hassles.
No Reason Asked
If you wish to use the accrued sum from your FD account, you need to mention the reason for the same. You can directly apply for the loan and with instant approval; the required money is transferred to your account.
Eliminate Processing and Documentation Fee
If you are applying for a loan offline, you might be charged for the documentation and processing. However, with an online application, you need to pay for the processing and documentation. Similarly, when applying for a loan against FD, you need not pay additional charges even if you apply offline.
Limitation for Loan Amount is Based on Your Savings
When you apply for a loan conventionally, the amount that is offered is based on various factors such as CIBIL score, income, and such. However, in case of loan against FD, the amount for your loan is dependent on the sum accrued in your FD account. Higher your savings, higher will be the availability of the loan amount.
Low Interest Rates
As stated before, the interest rates for a loan against FD is comparatively lower than that of standard loans (2% – 2.25%). This decrease is because FD acts as security making it a secured loan.
Avoid Prepayment Penalties
In case of a standard loan, you might be charged a penalty for prepayment of your loan. This charge is because of the loss of income incurred to the financial provider from the interest that could otherwise be paid to the financial company. However, when applying for a loan against FD, you have the option for prepayment without paying any penalty charges.
With such attractive benefits, financial experts advise taking a loan against FD if you have a Fixed Deposit Account. You can repay the loan amount in flexible tenors ranging from 90 days up to the maturity period of your FD with Bajaj Finance. Just like you check the FD interest rates, you can calculate the loan rate using the online tools easily accessible from the website. You should, however, make sure to read the terms and conditions before applying so as to avoid any loan rejections.