When you have the lump sum amount in hand, which is that one financial product, you think of investing? Have you ever paid attention to the fixed deposit? Yes, commonly known as FD, it would not be wrong to say that it is one of the most popular financial instruments known today.
Moreover, one of the biggest advantages of this product is that it gives you guaranteed returns, flexibility and so on. Hence, this is the reason why this product is considered to be one of the most popular.
Many of you will surely agree on the fact that at the time of emergency, one of the easiest ways out is to avail a loan. But did you even think of availing from a fixed deposit? Well, if you are someone who is not so sure about the same,reading this article is going to be worth for you.
Yes, you can avail an overdraft facility against FD! Now here comes the question, i.e. what does it work? What are the conditions and other norms? Let’s just explore the same in the article below:
How it is Given?
Loan against fixed deposit is given in the form of an overdraft against your deposited amount. Thus, you can say that it is an alternative which is given to you instead of breaking the deposit prematurely.
How much loan amount is allowed?
Many banks allow you a loan in the range of 70%-90% of the deposit amount. Not only this, many banks even offer more than that. Basically, there is no standard set on the loan amount that can be sanctioned. Well, it would not be wrong to say that it simply varies from bank to bank and also on the deposited amount.
Interest Rate on the Loan
Talking about the interest rate, it would not be wrong to say that a loan is given on the fixed deposit, which is usually 2%-2.5% above of the Interest paid by the bank on the deposit. However, it again varies from lender to lender.
In such a case, many banks do not levy a processing fee just like in case of a normal loan disbursal. But some banks do charge a minimal fee at the time of availing the same facility.
Tenure and Payment Procedure
The maximum tenure that you can get against the loan on FD is the term of the deposit itself. The payment procedure is just like a loan, where you pay EMIs on a regular basis or as directed by the lender.
Foreclosure of the Loan
If we talk about foreclosure charges, banks usually do not levy any foreclosure charges on availing a loan against FD.
Thus, in a nutshell, it would not be wrong to say that now you know the details of availing an overdraft facility against FD. Thus, in our next edition of the article, we will give you an insight into the overdraft facility against salary.
Hope this article was worth reading for you!