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The Best Way to Take a Loan Against Your Fixed Deposit

  • Highlights

  • Secured loan option for financial emergencies

  • Advantages of opting for loan against fixed deposits

  • Better safety by opting for loan against FD

  • Applying for loans against FD

Whenever you are in need for emergency finances, you can easily opt for a loan against FD. This is a secured loan option that requires you to pledge your FD as collateral in return for the loan amount.

There are various ways in which a loan against fixed deposit can benefit you, like low interest rates and relatively easier application formalities. It also helps provide the ability to save your prized assets—like land or property—from being put at stake.

What will you need to apply for a loan against FD

Before you apply for a loan against FD, you need to consider certain factors. Here are some things you need to have before applying:
1) Fixed deposit: Since this loan option is secured against a FD, it is a primary necessity for you to have a FD account in the first place. For those unaware of the term, fixed deposits are sums of money invested in an account that earns interest over a tenor.

2) FD with same value as your loan amount: Secondly, it is necessary for your FD to be of the same value as the loan you are borrowing. For example, for those borrowing a loan of Rs.1 lakh, their FD would have to be of the same value, or greater.
3) Other investments: The loan against FD can work better for you if you have multiple investments. If you just have a single FD that generates cash, it would be risky to put that FD at stake. Hence, before you apply, make sure you have various investments that are yielding good returns.
4) The tenor has to match: The tenor for FDs is the period over which the investment matures. A tenor for a loan against fixed deposits is the period over which you have to repay the loan amount. The tenor for your FD has to be the same as your loan tenor, and you have to repay the loan within the maturity duration of your fixed deposit.
5) Clearing the eligibility criteria and application formalities: To apply for this option, like all other options, you have to match the eligibility criteria. You also have to go through all the application procedures and submit basic documentation.

Additional Read: 5 myths about fixed deposits that you thought were true

Benefits of loans against deposits

1) These loans are secured and hence, have simpler eligibility requirements as compared to unsecured loans.
2) Since this option requires submission of collateral, the interest rates are also lower. This makes payment of EMIs more affordable.
3) It doesn’t require you to break or liquidate the fixed deposit.
4) You can avoid the hassle of putting valuable assets or property at stake.
5) You can easily calculate your projected gains by using a handy calculator, and manage your finances accordingly.

Additional Read: Credit card against fd

Loan Against Fixed Deposit

How to apply for loans against deposits

1) Download and carefully fill in all the details in the application form
2) Submit the form with FDR
3) Submit your ECS mandate and cancelled cheque in case you have a non-cumulative FD

Say goodbye to your financial troubles by applying for a rewarding loan against FD, where you get affordable interest rates along with hassle-free documentation for submission!

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