Personal Loan Against Fixed Deposit: Is It Beneficial For You?
People have often relied on fixed deposits (FD) for reliable investments return. FD has an image of being the safest asset. People invest money in FD for many reasons, including marriage, medical emergencies, house renovation etc. Many people don’t feel comfortable taking high risks, primarily when investing their hard-earned money. They opt for investing their money in fixed deposits for guaranteed returns. Apart from giving assured risk-free returns, a fixed deposit allows the investor to get a personal loan against the amount of their fixed deposit.
What Is a Personal Loan Against a Fixed Deposit?
There are many times when we urgently need money, and we might not have it at our disposal. However, with this option, you can get the cash for your emergency needs. The amount you have in your fixed deposit is kept as collateral, and you get a loan on the amount. Since there is collateral on this type of loan, it is treated as a secured loan. A personal loan against a fixed deposit also offers some extra benefits to the borrower, who makes it a lucrative offer, and many people avail it.
Features and Benefits of Personal Loan Against a Fixed Deposit
Here are the benefits of availing of a Personal Loan against a fixed Deposit:
Lower Interest Rates
The interest rates charged on a personal loan are one of the highest. One of the significant benefits of having a personal loan against a fixed deposit is lowered individual loan interest rate. You can get a personal loan by just paying 1-2% above the fixed deposit interest rates.
Suppose your fixed deposit rate is 5%, then you can get a personal loan at 7% only. This makes it quite attractive for borrowers as they have to pay lower interest on the amount borrowed.
As the interest rates are lower, the EMI payment by the borrower is also reduced significantly. Using the Personal Loan EMI calculator available on our website, you can calculate the exact EMI due every month. A lower EMI also doesn’t burden the borrower in meeting their daily expenses.
Since you are availing a loan against your fixed deposit, you get it through the same bank or financial institution. This makes the application process more manageable as you must file minimum documents. The processing time is also lowered, and you get the money instantly during emergency times.
No Processing Fee
Typically while getting any loan, you have to pay many charges like processing fees. With a loan against a fixed deposit, you don’t have to pay any such fees. If you are looking to close your loan earlier by making prepayments, these fees can also be waived depending on the lenders.
Continued Interest returns
If you take a personal loan against your fixed deposit, it does not mean you won’t earn interest on your deposits. You will continue to get interest on your deposits and grow your investments over time. You don’t need to break your fixed deposit, thus continuing your interests received.
To Sum it Up
Today, in our upgraded lifestyle, we all like to take short vacations or buy our dream home, or you might require it for some emergency. All these need us to have money at our disposal.
For many, they have to break their investments to fund them. However, with the help of getting a personal loan on our investments, all these can be achieved easily. It is light in your pocket and within your budget requirements.