Fixed Deposit or FD is one of the popular investment choices that Indians make because of the innumerable advantages that it has to offer. In case you don’t have a credit score or are unable to meet all the eligibility criteria for a loan, you can easily get a loan from your fixed deposit. This is one of the prime benefits of FD. Hence, you can apply and take a loan against your FD without actually breaking your FD!

Here’s all you need to know about taking loans against your FD’s:

How to apply for a loan against FD?

The procedure to apply for a loan against the FD is quite simple and easy. All you have to do is visit your bank and schedule an appointment with the branch/ bank manager there, fill the required form for it and submit all the necessary documents as asked for by the manager. In fact, these days, several renowned banks in India also offer the online facility for same. Thus, making it even simpler and more convenient for bank customers.

What is the basic eligibility criteria for it?

A very simple eligibility checks are there to secure a loan against an FD. Here are the conditions which need to be met:

• The loan applicant must have an active FD with the bank.
• The applicant’s age must be at least 21 years.
• The applicant must be an Indian resident.
• Different applications such as for an individual, societies, sole proprietorships, etc. are accepted.

What are the necessary documents to take the loan against an FD?

Following documents are a must when applying for it:

• Bank’s application form
• All the FD receipts
• In case you are planning to take the loan from financial institutions other than nationalized or private banks, a canceled cheque might be needed.
• A duly signed agreement
• 2-3 passport sized photographs (The number depends on bank’s requirements)
• A valid identity proof

What are the interest rates that are generally charged for the loan that you take?

When compared with the traditional/ regular loan rates, the interest rates that are charged in case of loans against FDs, are way lesser. That is, they are generally 2-3% lesser than the traditional ones.

Is there any facility for pre-payment of the loans taken against FDs?

Yes, pre-payment of loans against FDs can be done, that too with no penalty charges. In case you are planning to apply for one, it is great if you are in a situation to make the pre-payment of the loan within the next few days or months itself. This way, you’ll definitely be at a profit as there are no penalties charged for it.

Is there any limit for the tenure of loans against FDs?

The loan tenure of the loans against FDs completely depends on the tenure of the FDs that a person holds. You must remember that a loan tenure cannot be more than that of the FD tenure that you hold. Also, it is available only until the maturity of the FDs.

We hope that all your doubts against securing loans against fixed deposits were cleared with the questions answered above. All the answers suggest that it is very much possible and in fact, convenient to take loans against FDs.