All You Need to Know about Personal Loan against Fixed Deposit

Managing your finances is an important part of your life no matter who you are. Every individual has to seek to manage their finances properly so that they have enough resources in times of need. No one can predict when something may arise in life that would require funds more than your normal monthly expenses. At times, people are forced to sell their assets in these testing times, and the reason behind such a situation could also be improper management of finance too. That’s why investment and savings are so crucial. 

One of the important financial instruments which can serve the purpose of saving, investment, and also come to aid in times of need is a fixed deposit. The Loan against FD is a kind of short term secured personal loan which enables you to maintain your savings or investment and also acquire the needed funds for the time being. In addition, it also brings the advantage of a lower interest rate as compared to the regular personal loan. 

In order to avail loan against fd you are not required to meet the eligibility criteria of a personal loan or have a certain credit score. Most, if not all banks allow loan against FDs, and it comes with an overdraft facility. Opting for a fixed deposit as an investment option guarantees yourself a return on your investment and also gives yourself the option to use a loan against fd if required. Some crucial benefits of loan against fd are: 

  1. Processing Fee: Most banks do not charge any processing fee for this loan, and if some banks do then that fee is lower than what is charged for any other loan. 
  2. No Break of FD: When you avail loan against your FD, then there is no need to break your fixed deposit. It continues to earn interest and function like before. 
  3. Loan Process: The processing of loan against FDs is quick and hassle-free. The amount of documentation required is considerably low as well. 
  4. Interest Rate: Another vital benefit is that the rate of interest charged is lower than the regular personal loan or even any other loan for that matter. 

Some notable features of loan against FD are: 

  1. The loan amount depends entirely on the amount of you invested in fd. Most banks allow 80-90% of the deposited amount as a loan while some specify the limit based on maturity amount. 
  2. The maximum tenure of your loan can not exceed the maturity date of your fixed deposit. Thus, you can avail the loan for a tenure that is lower than the remaining tenure of fd but not more. 
  3. Anyone who has a single or joint FD and has completed a certain amount of tenure depending upon the policy of the bank is eligible for the loan against fd. 
  4. The rate of interest charged is generally 1-2% higher than the interest rate of your fixed deposit. 
  5. The processing fee in most banks is NIL, while some may charge a maximum of 1% of the loan amount. 
  6. The collateral pledged for the loan is your fixed deposit. This means you can only get the maturity amount of your fixed deposit when you have fully repaid the loan. The deposit will continue to earn interest, but at the time of maturity, payment will be made only when the loan is cleared. 


The need to properly manage finance is the same for all, no matter your profession and education degree you must know how to handle your money to make sure you are always on the growth side of your finances. Manier times people sell their assets in times of emergency need of funds, as this happens mostly because they did not manage their finances properly. 

Loan against fd is one such option which lets you avail the funds that you require without losing the saving or investment that you made. It is basically a short term secured personal loan at a rate lower than the regular personal loan. Some key benefits of loan against fd are: 

  1. You do not require to break your FD to avail of the loan. 
  2. Most banks do not charge any processing fee for the loan. 
  3. The processing time of the loan is less, and documentation is minimal. 
  4. The rate of interest charged is lower than any other loan, especially the regular personal loan. 

The main features of loan against FD are: 

  1. Anyone with an Fd can avail of the loan. Banks although require a certain amount of tenure to have passed before activating the loan feature. 
  2. The collateral for the loan is your fixed deposit. 
  3. The loan amount depends entirely on your deposit amount and maturity value. 
  4. You continue to earn interest on your FD during the loan tenure. 


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