FD loan, Now, if you need money, you can also take a loan against your bank’s FD. We will give you information on how you can apply for it.
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Who does not need money these days? It has been seen many times that people in India break their FD when they need money. If anyone takes a loan by doing this, he may have to suffer huge losses. Because if you break the FD before maturity, you will have to pay penalty and will also get less interest.
How much penalty will you have to pay?
If a person makes an FD of Rs 5 lakh, which is as per the rules of the country’s largest bank RBI, according to RBI, if he breaks the FD before it matures, he may have to pay a penalty of 0.50%. And if the FD is more than ₹ 5 lakh, you may have to pay a penalty of 1%.
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How much less interest will you get if you break your FD prematurely?
If you break the FD prematurely, you will get the rate at which you bought the FD.
That interest is not received. According to the RBI website, if you break the FD before time, you will get 1% less interest than the interest you were supposed to get on the FD.
For example, suppose you have made an FD of Rs 2 lakh at the rate of 6% for 1 year, but you break it only after 6 months, the bank will pay interest on your money at the rate of 5%, and not at the rate of 6%. Apart from this, you will also have to pay a penalty.
After deducting up to 1% interest on FD (as mentioned above) and charging penalty as per the amount of FD, your money is given to you.
Features of Loan Against FD
- Loan Amount: You get a loan of up to 90% of your FD amount.
- Interest Rate: The interest rate for loans is 1% higher. That is, if your FD is paying 6% interest, you get a loan on it at 7% interest.
- Repayment Time: You have to repay loan in 3 to 5 years. However, this time is determined by the loan amount and the capacity of the borrower.
Interest Rate
- If you take an FD loan, you will have to pay 1-2% more interest than the interest you get on FD.
For example, suppose your FD is getting 4% interest, then you can get a loan at 5 to 6% interest rate. - Thus, you can take a loan up to 90% of the total FD amount.
- For example, if your FD amount is ₹ 2 lakh, then you can get a loan of ₹ 1 lakh 90 thousand.
What will happen if the loan is not repaid?
If a person takes a FD loan and is unable to repay it, then when your FD matures, the bank will deduct the outstanding amount of the loan from it. In such a situation, you will get whatever money is left in the FD after this.
Which option will be right for FD loan?
If your FD is worth Rs 1 lakh and you need Rs 50 thousand, then it would be right to take a FD loan. Because this will save your savings and your money needs will also be fulfilled. On the other hand, if you need the entire amount of FD, then it would be better to break your FD before time because with this you will get your money after a little penalty. 85 to 95% of the money is available as FD loan.
Conclusion
When you need money, taking a loan against your FD instead of breaking it can be a wise move. By taking FD loan, you save on penalty and low interest on premature break of FD. Although interest has to be paid on loan, it is less than the penalty and interest loss on breaking the FD. With this, your savings remain safe and your money needs are also fulfilled. If you only need a small amount, it would be wise to take an loan, but if you need the entire FD amount, it may be better to break the FD despite the penalty. Understanding these options and making the right decision is important for your financial health.
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