₹25,000.00 - ₹25 Cr
Loan of up to 80% of policy value| Funding against policies under lock-in period
Overview
Secured vs Unsecured Loans Which is Right for You
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What is EMI?
In summary
- A loan against FD is a secured borrowing option where your fixed deposit is pledged as collateral, while an unsecured loan does not require collateral.
- Interest rates on loans against FD are generally linked to the FD rate and may be around 1–2% higher, depending on the lender and terms.
- Unsecured loans typically consider factors such as credit profile, income, and repayment capacity when determining eligibility and pricing.
- A loan against FD allows the deposit to continue earning interest while it remains pledged, subject to the applicable terms.
- Before choosing between the two, consider the interest rate, loan amount, repayment tenure, charges, and impact on your FD.
A loan against a fixed deposit (FD) is a secured borrowing option that allows you to use your FD as collateral without breaking the deposit. Since the loan is backed by your investment, lenders generally offer lower interest rates, usually around 1–2% above the applicable FD interest rate. An unsecured loan, such as a personal loan, does not require any collateral and is approved primarily based on factors like your credit score, income, and repayment capacity. As a result, unsecured loans typically carry higher interest rates because they involve greater risk for the lender compared to loans secured against fixed deposits.
If you already have a fixed deposit, you may not need to rely on expensive unsecured loans at all. A loan against FD can often be a smarter, lower-cost choice. Apply now
What is a loan against fixed deposit?
A loan against fixed deposit lets you borrow money by keeping your existing FD as security. Your deposit stays intact and continues to earn interest, while the lender gives you a loan against its value.
This is a secured loan, also known as a loan on fixed deposit, because your FD acts as collateral. Usually, you can borrow up to 75% of the FD amount, depending on the lender’s rules.
Advantages of a loan against fixed deposit
How to Secure a Rs. 2 Crore Loan Against Securities Instantly
A loan against fixed deposit secured loan is often chosen for short-term or urgent needs. Here’s why many borrowers prefer it:
Lower interest rates: Since your FD is pledged, lenders take less risk and pass on the benefit to you.Unsecured
loans do not require any collateral or security. These loans are
granted based on the borrower's creditworthiness and repayment
capacity. Since there is no asset involved, unsecured loans carry
higher interest rates compared to loans against fixed deposits.
Quick processing: Minimal checks mean faster approval and quicker access to funds.
FD continues to earn interest: Your deposit is not broken; it keeps growing.
Simple eligibility: No income proof or high credit score requirements in most cases.
What are unsecured loans?
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Unsecured loans are loans given without any collateral. You do not need to pledge an FD, property, or investments. Instead, the lender decides based on your income, credit score, and repayment history.
Common examples include personal loans and some short-term credit options. Since the lender has no security, interest rates are usually higher.
Advantages of unsecured loans
Features & Benefits for Bajaj Finance loan against shares
Despite being costlier, unsecured loans still have their place:
No collateral required: Ideal if you do not have an FD or other assets.
Flexible usage: Funds can be used for almost any personal need.
Higher loan amounts: With a strong credit profile, you may access more funds than an FD-based loan.
Loan against fixed deposit vs unsecured loans: key differences
Eligibility criteria for Bajaj Finance loan against shares
When in need of quick funds, both Loan Against Fixed Deposit (LAFD) and unsecured loans emerge as popular options. However, they differ fundamentally in terms of structure, cost, and eligibility. While a loan against fixed deposit is a secured loan where your FD acts as collateral, an unsecured loan does not require any asset backing, making it more accessible but typically more expensive.
Here’s a breakdown of how these two loan types compare across key parameters:
| Feature | Loan Against Fixed Deposit (LAFD) | Unsecured loans |
| Collateral requirement | Requires you to pledge your fixed deposit as security | No collateral needed; loan is approved solely on creditworthiness |
| Interest rates | Lower, as the lender has security in the form of your FD | Higher, to compensate for the lender’s risk |
| Loan amount | Typically, up to 75% of your FD’s value | Depends on your income, credit history, and the lender’s internal criteria |
| Processing time | Faster processing since the collateral minimizes risk and reduces formalities | Slightly longer as it involves detailed verification and risk assessment |
| Repayment tenure | Usually short to medium-term, ranging from 12 to 36 months | Can range from a few months to several years depending on the lender |
| Eligibility criteria | Must have a valid fixed deposit with the lender | Based on your income level, credit score, and employment stability |
| Documentation required | Minimal—usually FD receipt, ID proof, and address proof | More documentation such as salary slips, bank statements, credit reports, etc. |
| Risk of default to lender | Low, since the FD can be liquidated if you default | High, as there is no backup asset |
| Common use cases | Ideal for emergencies or short-term liquidity without breaking the FD | Used for various purposes like weddings, travel, education, or medical needs |
| Impact on credit score | Minimal if paid on time; less reliance on credit score | Heavily dependent on repayment discipline; defaults can severely impact credit health |
If you already have an FD, choosing alternatives to unsecured loans like a loan against FD can help you save significantly on interest. Apply now to get started
Conclusion
Both a loan against fixed deposit and unsecured loans serve different needs. If you have an FD and are looking for affordable, quick funds, a loan against FD is often the smarter choice. It lets you unlock liquidity without touching your savings. Unsecured loans work well when you do not have assets, but they come at a higher cost.
Before choosing expensive unsecured loans, always explore alternatives to unsecured loans like a loan against fixed deposit. It could be the easier and more economical option for you. Apply now
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Frequently Asked Questions
General
Can anyone with a fixed deposit avail a loan against it?
Yes, most FD holders can avail a loan against their deposit, provided the FD meets the lender’s minimum value and tenure requirements. However, FDs held by minors or under specific restrictions may not qualify.
Are unsecured loans riskier than loan against FD?
How much can I borrow against my fixed deposit?How much can I borrow against my fixed deposit?
How fast is the approval process for each loan type?
Loan against FD generally gets approved instantly, as the FD itself serves as security. Unsecured loans may take longer since lenders conduct thorough checks on income, credit score, and repayment capacity before approval.
How does an unsecured loan work?
An unsecured loan is offered based on your income, credit score, and repayment capacity, without needing any collateral. Since there’s no security involved, the lender may charge a higher interest rate compared to secured loans.
Disclaimer
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