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This article is more than 1 year old.

How to take a loan against fixed deposit

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According to financial analysts, loan against FD can be availed by all FD holders (individual as well as joint holders).

How to take a loan against fixed deposit
Loan against fixed deposit (FD) is a type of secured loan that allows customers to use deposits as security and get loan against them. At the time of financial crisis or emergency, investors can apply for loan against their FD investment. The loan amount, in this case, largely depends on the sum that is lying in the investor's account.  It is done in the form of an overdraft facility or as a demand loan.
Here are key things to know about loan against FD:
Who can apply?
According to financial analysts, a loan against FD can be availed by all such account holders (individual as well as joint holders). FD in the name of a minor, however, doesn't qualify for this facility.
Interest rate and repayment period
The interest rate charged on loan against FD ranges between 1 percent and 2 percent above the FD rate and can be repaid in up to 60 months, according to BankBazaar - a marketplace for financial products. The rates are lower as compared to personal loans which means EMIs are lower, it said.
Documentation
Loan against FD is a time-efficient way of getting loan. It requires minimum paperwork as the lender already has the details of the customer applying for loan (since he/she holds an FD account with the lender).
Application form, duly signed agreement and FD receipts discharged in favour of bank are required to avail this facility, according to BankBazaar.
Credit score eligibility
In this case, credit score is not considered. Individuals with low CIBIL or credit score can also apply for loan against FD, whose application may otherwise be rejected if applying for a personal loan, it said.
CLBIL score is an important metric that is used by financial institutions to check when they receive a credit request from individuals.
Loan amount
The maximum loan amount that can be claimed as loan depends upond the money invested in the FD account.
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