A Loan Against Fixed Deposits (FD) is a type of secured loan where individuals can pledge their fixed deposit as collateral to access funds for immediate needs. Instead of breaking the FD and losing interest, this loan allows borrowers to leverage their FD while still earning interest on the deposit. Typically, borrowers can get a loan of up to 90% of the FD value, depending on the bank’s policy.

Loans against fixed deposits are popular due to their lower interest rates compared to personal loans, as they are secured by the deposit. Additionally, the loan tenure generally aligns with the FD’s maturity, providing flexibility in repayment options.

Advantages of Loan Against Fixed Deposits:

• Lower interest rates compared to unsecured loans.
• Continued interest earnings on the fixed deposit.
• Quick approval process due to secured nature.
• Flexible loan tenure, often up to the FD’s maturity.
• No impact on FD investment or long-term savings goals.

Types of Loan Against Fixed Deposits:

Overdraft Facility Against FD
This facility allows the borrower to overdraw funds from the FD up to a certain limit. Interest is charged only on the amount overdrawn, providing a cost-effective solution for managing short-term needs.

Term Loan Against FD
In this option, the borrower can get a lump sum amount as a loan against the FD, repayable in fixed installments. The loan amount is calculated based on a percentage of the FD's value, and repayment terms are typically flexible.