If you suddenly need money and you are going to take a personal loan, then wait a bit. The interest rates of personal loans are very high. Also, while taking a loan, processing fees, etc. have to be paid. Instead of taking an expensive loan, it is better to think about taking a loan against FD once. This loan will be much cheaper than a personal loan and you will also get rid of the hassle of processing fees etc. Know the special things.

For whom is it a better option
If you have made a long-term FD, that is, your FD has a tenure of 5 to 10 years and you need money in between, then instead of breaking the FD or taking a personal loan, you can choose the option of loan against FD. On breaking the FD, you will get less interest than the prescribed interest and will also have to pay a penalty. In such a situation, if you choose the option of loan on FD, then your savings will also be saved and you will also repay your loan gradually with a low interest rate.

How much amount will you get as a loan?

Usually, you get 90 to 95 percent of the FD amount as a loan. However, this limit can be different in different banks.

How much interest is charged

Usually, 1% to 2% more interest is charged on the loan taken on FD than the interest rate of FD. Suppose you have made an FD for 5 years and you are getting interest at the rate of 7 percent on it, then you will get a loan with 8 to 9 percent interest. Whereas the interest rate of a personal loan can be from 11% to 24 percent.

There will be no processing fee.
You also have to pay a processing fee on a personal loan, but there is no processing fee while taking a loan on FD. Let us tell you that the loan taken against FD is considered a secured loan. While taking it, the bank mortgages your FD as a security/guarantee.

In how much time the loan has to be repaid

The duration of your loan depends on the duration of your FD. You have to repay the loan before the maturity of the FD against which you have taken the loan. If you are unable to repay the loan on time, then that loan is covered by the amount of your FD. Also, you can repay this loan at your convenience in a lump sum or in installments.

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