Fixed deposit is a preferred investment option for risk-averse investors, who seek stable growth and safety of their investment capital. Several investors also consider fixed deposit as an emergency fund, as you can liquidate your FD to address a short-term need that warrants immediate finance. However, doing so will put an end to the earning potential of the investment. Similarly, making a premature withdrawal from your FD will eat into your returns.
In such a situation, the best move is to avail a loan against fixed deposit. Bajaj Finance Limited, the lending and investment arm of Bajaj Finserv is offering Loan against Fixed Deposit where you can pledge your FD as collateral, in return for the loan amount. This secured loan is offered at lower interest rates, with quick processing, flexible repayment options and minimal documentation.
Read on to know more about this option, in order to make an informed decision:
What is a loan against fixed deposit?
You can pledge your fixed deposit as collateral and avail a loan against it. Though you submit your FD as security, you still retain complete ownership of the investment and it continues to earn interest too. Read on to know the features and benefits of loan against fixed deposit.
Lenders determine the sanction on a loan against FD based on the LTV, which varies across lenders and ranges from 70% to 95% of the value of the fixed deposit. For instance, Bajaj Finance offers a Loan Against Fixed Deposit of up to 75% of an FD payable at maturity and 60% of an FD whose interest is payable at regular intervals.
The repayment terms for a loan against FD vary depending on the financial institution, but the tenor doesn’t exceed that of the FD. When you choose Bajaj Finance, for instance, you can repay your loan against FD over a flexible tenor ranging from 90 days from the date of investment up to the end of the tenor.
Cost-effective interest rate
The interest rate on a loan against fixed deposit is relatively low as compared to other types of loans. The rate varies across lenders, but is usually 1% to 3% over the interest rate that you earn on the fixed deposit.
Simple eligibility criteria
Even though the eligibility terms for a loan against FD vary from one lender to another, they are easy to match. To take this loan via Bajaj Finance, you must be either of the following:
- Resident citizens of India
- Hindu Undivided Family (HUF)
- Sole proprietorships, partnership firms, and companies including group companies
- Clubs, associations, and societies
- Family trusts
Other common eligibility criteria include:
- At the time of applying for the loan, the FD should not have reached maturity
- The fixed deposit should be free from restraint or encumbrance
- The fixed deposit should not be registered under a minor’s name
Since you avail a loan against FD from the same issuer with whom you have a fixed deposit, the documentation involved is minimal. This helps hasten approval and disbursal of funds so that you can address your emergency in a hassle-free manner, without any delay. For instance, Bajaj Finance only requires you to submit an application form and your FD receipt. In case you have an FD that gives you payouts at regular intervals, you also have to submit an ECS mandate and a cancelled cheque.
How to apply for a loan against fixed deposit –
Applying for a loan against FD is straightforward too. When you choose Bajaj Finance, you can apply for the loan in the following manner.
- Download the application form from the website, fill it and submit it along with the FD’s receipt at your nearest branch
- Alternatively, apply for a loan against FD by sending ‘LAFD’ as an SMS to 9773633633. You can also email firstname.lastname@example.org or give a missed call on 9266002288.
Applying for this loan is easy, with minimum waiting time. Invest in a Bajaj Finance Fixed Deposit, and use it as an emergency fund.
The best part about a loan against FD is that you can continue earning interest on your FD, without losing out any of the gains, while also catering to your urgent financial requirements. Make a smart investment choice with Bajaj Finance Fixed Deposit, and watch your earnings grow.
About Bajaj Finance Limited
Bajaj Finance Limited, the lending arm of the Bajaj Finserv group, is one of the most diversified NBFCs in the Indian market catering to more than 31 million customers across the country. Headquartered in Pune, the company’s product offering includes Consumer Durable Loans, Lifestyle Finance, Digital Product Finance, Personal Loans, Loan against Property, Small Business Loans, Home loans, Credit Cards, Two-wheeler and Three-wheeler Loans, Commercial lending/SME Loans, Loan against Securities and Rural Finance which includes Gold Loans and Vehicle Refinancing Loans along with Fixed Deposits. Bajaj Finance Limited prides itself on holding the highest credit rating of FAAA/Stable for any NBFC in the country today. It is also the only NBFC in India with the international ‘BBB’ with stable outlook for long-term, by S&P Global Rating.
To know more, please visit: https://www.bajajfinserv.in