Fixed deposits are considered low-risk investments. With this investment tool, you can park a certain amount of funds for a fixed period. During this time, you’ll earn a pre-defined interest that was applicable at the time of FD booking.
Once your FD matures or completes its tenure, you’ll receive the deposit and the interest accrued in your registered maturity account. However, it depends on the type of FD you’ve opted for. In case you have cumulative FD, you will receive the principal and the interest at the time of maturity. While for non-cumulative FD you receive the interest amount as per the selected payout option.
Emergencies often come unannounced. In case of an unforeseen situation when you need funds for urgent expenses and a loan against your FD (LAFD) can be a great option to consider. In such a case, you can use your deposited amount as collateral and get an LAFD. This facility helps you to get funds at a low-interest rate without losing your fixed deposit.
If you’ve invested in a Bajaj Finance Fixed Deposit, you can easily apply for a loan against FD in a hassle-free online process. The loan amount depends on the amount that you’ve deposited while the repayment tenure last until the FD maturity date. Please note that you can apply for a loan against FD once your deposit completes more than three months lock-in period.
In case you’ve opted for a cumulative FD, you’ll get up to 75% of the FD amount as your loan. However, if you have a non-cumulative FD, you can get a loan of up to 60% of the FD amount. The interest rate of your loan against FD is 2% p.a. above the deposit interest rate. If you choose to borrow a loan against your FD, you don’t need to pay any EMIs. Your loan amount along with the interest, gets adjusted against the FD amount at the time of FD maturity.
For instance, Mayur has opened a non-cumulative FD of Rs. 2 lakh for 24 months. The applicable interest rate on his FD is 7% per annum. After completing 6 months of the FD, he needs funds for some urgent expenses. He can use our online services to apply for a loan against FD. With our LAFD services, he can get a loan of up to Rs. 1.20 lakh at an interest rate of 9% p.a. for 18 months.
Step-by-step guide on applying for a loan against an FD
- Initiate application: Click on 'Apply' to start the application process.
- Mobile verification: Enter your mobile number, request an OTP, and verify your identity.
- Access my account: Upon successful verification, you'll be redirected to your customer portal, 'My Account'.
- Select deposit: Under 'My Relations', choose the specific fixed deposit for which you want to apply for a loan.
- Start loan application: Click on 'Get a loan against FD' under 'Quick Actions'.
- Specify loan amount: Enter the desired loan amount.
- OTP verification: Generate an OTP and enter it for security purposes.
- Submit application: Click 'Submit' to finalize your application.
- Alternative method: Visit your nearest FD branch to apply for a loan against your fixed deposit.
If you have an FD with us and need to apply for a loan against it, you can visit our customer portal – My Account for hassle-free application. Follow these easy steps to apply for a loan against fixed deposit using online Bajaj Finance services.
- Click on the ‘Sign-in’ button on this page to go to My Account – Bajaj Finance customer portal.
- Enter your registered mobile number and the OTP to sign-in.
- Verify your details using your date of birth and proceed.
- Select your FD from the ‘My Relations’ section.
- Click on the ‘Loan Against FD’ option from the ‘Quick Actions’ section.
- Enter the required details and review your bank account details.
- Verify your details with the OTP sent to your registered mobile number and proceed with the loan agreement and bank account confirmation.
Pros and Cons of Loans Against Fixed Deposits
Pros
- Quick disbursement: Loans are often disbursed quickly, sometimes even on the same day.
- Lower interest rates: Compared to unsecured loans, interest rates on loans against fixed deposits are generally lower.
- No prepayment penalties: You can repay the loan early without any additional charges.
- Tax benefits: Interest paid on the loan might be tax-deductible in certain cases.
- Maintain ownership: You retain ownership of the fixed deposit even while it is pledged as collateral.
Cons
- Limited loan amount: The loan amount is typically a percentage of the fixed deposit value, limiting the amount you can borrow.
- Fixed deposit maturity: If you take a loan against your fixed deposit, you may lose the benefit of higher interest rates that might be available for longer tenures.
- Risk of default: If you fail to repay the loan, the lender may liquidate your fixed deposit to recover the outstanding amount.
- Reduced liquidity: While you can still access the funds through a loan, it reduces the liquidity of your fixed deposit.
You’ll receive the funds within 24 business hours of application. In case there’s a joint account holder for your FD, they’ll also receive an OTP for verification during the application process.
You can also download our app from Play Store/ App Store and apply for a loan against FD on the go using online Bajaj Finance services.
