Loan Against Fixed Deposit - Interest Rates and Charges

The rate of interest on your loan against a fixed deposit is 2% p.a. above the deposit interest rate.

Common fees include processing fees, part-prepayment fee, foreclosure charges and many more. These fees are typically charged upfront or deducted from the loan amount and can add to the total cost of the loan.

The tenure of a Bajaj Finance loan against fixed deposit is up to 36 months.

To avail a loan against a fixed deposit (FD) at low interest rates, follow these steps:

a. Check with your bank or financial institution if they offer this facility.

b. Ensure your FD is eligible for a loan, usually after a specific lock-in period.

c. The interest rate for the loan is typically 1% to 2% higher than the FD interest rate.

d. Compare offers from different banks and choose the one with the lowest interest rate and favorable terms.

When interest rates increase, new fixed deposits offer higher returns, but your existing FD continues to earn interest at the original locked-in rate. You would not automatically benefit from the hike unless you invest in a new FD or modify the existing one, which may involve penalties.

Breaking your FD early may lead to penalties and loss of interest. Instead of losing returns, you can opt for a loan against FD. The loan against fixed deposit interest rate is usually just slightly higher than your deposit rate, helping you meet urgent needs without disturbing savings.

You pay interest only on the amount you withdraw, not on the total sanctioned loan limit. This makes it cost-efficient, as you can borrow as needed without paying for unused funds.

Yes, you can. A loan against FD allows you to borrow funds while keeping your fixed deposit intact. The FD continues to earn interest, ensuring you benefit from both liquidity and returns.

If you fail to repay on time, the lender may adjust the outstanding loan amount from your fixed deposit. This could reduce your FD maturity value, covering both principal and accrued interest.

The LTV ratio for FD loans is up to 75% of the FD value. It depends on the lender’s policy, FD tenure, and deposit amount, ensuring you get access to funds without liquidating your investment.

Breaking an FD may be better if the loan interest rate exceeds your FD interest earnings or if you need funds beyond the permissible loan limit. Otherwise, taking a loan preserves both your deposit and returns.

You typically need your fixed deposit receipt, identity proof, address proof, Aadhaar/PAN, and a filled loan application form. Some banks may also ask for recent photographs or KYC verification if not already updated.

Yes. Many banks provide instant loans or overdraft limits against fixed deposits through net banking or mobile banking. The process is paperless for existing customers, and the amount is disbursed instantly without breaking the FD.

Lenders generally offers up to 75% of the FD’s value as a loan, depending on tenure, deposit amount, and internal lending policies. The loan amount grows as the FD value grows and remains secured against it.

A loan against FD can be either. Some banks offer it as a traditional term loan with EMIs, while others provide an overdraft facility where interest is charged only on the amount you withdraw or use.    

In most cases, the loan is offered only if the FD is held with the same bank. Some lenders may allow loans against external FDs, but they often require lien marking and additional paperwork.

Funds are usually disbursed faster for existing customers via online banking. Offline applications may take hours to one working day, depending on KYC status, lien marking, and documentation.

You can apply through your bank’s net banking or mobile app by selecting the ‘Loan/Overdraft Against FD’ option. Choose the FD, specify loan value, confirm digital agreement, and the amount is credited immediately to your account.