In the face of unprecedented events and looming uncertainty, like the Covid-19 pandemic, the need to have an emergency fund has come to the forefront. An ideal emergency fund should be planned in a way that offers you safety, liquidity and decent growth to help you meet your monthly obligations and preserve your way of life, without having any adverse impact on your CIBIL scores or credit reports. People with an emergency fund end up in a better position to support themselves and their families in case there is a financial fallout or any unwelcome finance-crunching situation.
Such situations warrant immediate action, which is why most people end up breaking their fixed deposits (FD) before maturity, causing them to lose out on interest and disrupt their investment plans.
But, what if there was a way for you to keep your investments and also get liquid cash against it to serve your liquidity needs? A loan against your FD how you can do it.
Lenders usually lend up to 90% of the value of your FD as an overdraft facility. Of course, this limit varies from lender to lender. The rate on such loans is generally set about 1% – 2% above the FD rate.
Features Of A Loan Against Fixed Deposit
- No Need For Credit Score
In case of fixed deposit schemes like a loan against FD, your credit score is not considered. This makes it a lot more attractive than, say a personal loan.
A loan against FD is a time-efficient way of obtaining liquidity. It requires minimal documentation as the lender already has all your details, from the FD. An application form, a duly signed agreement and FD receipts discharged in favour of the lender are required to avail this facility.
- Flexible Loan Amount
The lender decides the loan amount depending upon the money you have invested in the FD account. Generally, you can claim up to 90% of the principal amount in your FD.
- No Extra Fees
Lenders don’t usually charge any processing fee for loans against fixed deposits. There are also no extra charges for foreclosure or part-prepayments. This ensures that you can fulfil your financial needs easily with attractive PNB housing FD rates.
Read this also: What does a Financial Advisor Do and Why We do Need Them?
How To Apply For A Loan Against Fixed Deposit?
To apply for a loan against fixed deposit, you can get in contact with the lender’s nearest branch. You can also visit their website, and look for instructions regarding the same. There also may be options for you to contact them or leave some inquiries.
A loan against fixed deposits is easier to obtain and can help you save a lot of money too. This loan can be availed in less than a day, by simply filling up an application form and getting your FD receipts together. It helps you streamline your finances better and avoids bearing the loss of interest rates on your fixed deposits, when you break them. Availing this loan puts up your FD as collateral but this doesn’t stop the FD interest from accumulating again in your account. So, earn while you keep liquidity in your finances.