A Complete Guide to Get a Loan Against an FD
It’s simple to borrow money against a fixed deposit to get quick access to cash. In addition, you have the option of borrowing a loan against an FD as opposed to losing all or a portion of your investment. The Bank of Baroda loan against the FD program allows you to borrow up to 90% of the overdraft on your loan. The only amount that must be repaid is the original loan amount plus interest.
People typically seek funding options, such as loans and other lending opportunities, during a financial emergency or cash crunch. Taking loans against fixed deposits is one of those essential sources (FD). This is a quick way to approach financial institutions about short-term loans. You can easily choose to get a loan against FD from the bank where you already have fixed deposits instead of prematurely terminating them.
You won’t need many documents if you take out a loan against your FD. Additionally, there is no pre-payment penalty and interest rates on loans secured by FDs are lower than those on traditional loans. Let’s explore everything you should know before taking out a loan against a fixed deposit.
Fixed deposits are financial products that let you make long-term investments with the assurance of a return. They offer more appealing returns than conventional savings accounts. The loan against FD is disbursed to the borrower all at once, just like any other loan, and is paid back by the borrower in equal monthly instalments.
The amount of the FD deposit determines the loan’s amount. Depending on the deposit amount, this could reach 90%. A loan against a customer’s fixed deposit, which is a type of secured loan, may be obtained using the deposit as security.
A small amount is required to open a BOB Fixed Deposit . With the Bank of Baroda, you can relax knowing that despite changes in the market, an existing deposit won’t be altered. The benefits of a loan against FD BOB (Bank of Baroda) are that it includes flexibility, security, and guaranteed savings returns.
Holding a fixed deposit with the bank or financial institution you’re seeking a loan from is the basic requirement to qualify for a loan against FD. You should also, however, fit one of the following descriptions:
To ascertain if you are eligible to apply for a loan against fixed deposits , see the following list:
Also Read: How To Open A Fixed Deposit Account
There are several benefits of a loan against your FD account. Consider the following list of features and benefits of a loan against FD.
Banks provide customers with an overdraft facility in the form of a loan against Fixed Deposit . Also known as OD against FD. The overdraft or OD limit, which is secured by a fixed deposit, is lower than the deposit amount, but the rate of interest is higher than the rate that is currently being charged on FD cards.
Additionally, it is important to keep in mind that interest is only charged on the amount of the overdraft, not the entire limit. Let’s take an example of OD against FD. For instance, Ms A has an 85%OD limit and an Rs. 1.5 lakh FD. Only half of the deposit amount—75,000 rupees—is borrowed by her. As a result, interest will no longer be charged on deposits that exceed 85% of the amount of the deposit, but only on the first 50%.
There is still time to start an FD if you haven’t already invested in one. Getting a loan against an existing fixed deposit is simple if you have one.
Whatever your financial needs may be, you can easily use the FD to support yourself. Get the most competitive interest rates by starting a Bank of Baroda FD. The BOB FD calculator can be used to determine how much interest will be available when your deposit matures.
Up to 90% of the amount of your FD may be borrowed. You can also look at the interest rate for loans secured by FDs.
The interest rate for the loan against FD will be determined by your bank or will be 1% to 2% higher than the current interest rates.
An FD loan must be repaid before the fixed deposit matures.
Yes, senior citizens are eligible to apply for loans secured by FDs
Source : Banking Mantra