You have availed a fixed deposit with a leading online lender two years back. Out of nowhere, a situation came which forced you have an immediate need for money.
Since you had the fixed deposit account and were also aware that you can always break it easily whenever you want, you decided to break it and use the money to cover the needs. But, someone suggested availing a loan against the FD which confused you. You were in two minds to go which way.
If you are confused between a loan against fixed deposit and an FD withdrawal, let’s provide you some quick inputs.
What is a loan against fixed deposit?
A loan against fixed deposit can help you recover from any immediate needs of the cash since you can avail a loan against your fixed deposit amount. The option is also affordable as compared to personal loans or credit cards.
Under a loan against fixed deposit facility, you are free to opt for a loan up to 60-75% of your fixed deposit investment figure.
What’s more, the rate of interest charged by the lenders will only be 2-2.5% more than the rates being presently offered on the FD.
You also will have to cough up minimal or negligible processing charges and will face no prepayment charges also.
It is a secured loan since lenders consider the FD amount as the collateral. The rate of rejection is negligible, and the approval and money disbursement are higher.
The biggest advantage of applying for a loan against fixed deposit is that irrespective of you availing a loan, you will continue to avail the earlier agreed interest profits on it.
Thus, in case of an immediate situation demanding money, opting for a loan against fixed deposit should be your first bet.
What is an FD withdrawal?
A FD (Fixed Deposit) scheme also has the provision to withdraw an amount before its maturity. Although service providers enable its fixed deposit subscribers to withdraw the FD amount before its maturity, they also charge some penalty on it.
What’s more, the guaranteed interest promised on an FD’s maturity is not provided or ceased for standard citizens. Senior citizens get only a portion of the interest gains. Hence, a premature fixed deposit withdrawal is not a safe and sound option if you have an urgent need for the money.
The Bottom Line
So, the confusion is crystal clear that when you have to choose between a loan against the fixed deposit or fixed deposit withdrawal, you should go for a loan against FD.
No matter what investment options that you might have already invested before, applying for a fixed deposit with a leading online lender is always a profitable option.
Land on a lender’s website and apply for a fixed deposit scheme and make the most of its features and benefits.