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Fixed Deposits (FDs) are a popular investment choice in India due to their safety, fixed returns, and liquidity. However, instead of breaking your FD during financial emergencies, you can opt for a loan against fixed deposit. This facility allows you to borrow against your deposit at a lower interest rate while keeping your FD intact.
Let’s explore the key benefits of taking a loan against an FD, eligibility criteria, and application process, before opting for one.
What is a Loan Against Fixed Deposit?
Similar to a loan against property (LAP), a loan against fixed deposit is a secured loan. In this case, instead of your property, the lender offers funds against your FD as collateral. Since the deposit serves as security, banks and financial institutions provide this loan at competitive interest rates, usually lower than personal loans.