Why Is a Loan against Fixed Deposit Cheaper than a Personal Loan?
Borrowing against a fixed deposit (FD) is often an efficient way to access funds. Banks usually lend up to 80–90% of the FD value, allowing depositors to retain interest income while enjoying liquidity at a low cost.
In contrast, personal loans carry higher rates between 10–24% annually. An FD loan costs just 1–2% more than the FD’s rate, making it ideal for short-term needs or emergencies.
You may also explore our Nifty Expiry Tip and BankNifty Intraday Tip for expert guidance in daily trading.
FD-backed loans do not harm credit scores since they are secured. Borrowers may repay in lump sum or instalments with complete flexibility.
Personal loans remain unsecured, involve stricter checks, higher fees, and longer approval times. Hence, for temporary requirements, an FD-backed loan is a smarter financial choice.
Experts recommend keeping personal loans for long-term flexibility, while secured FD loans preserve both peace of mind and cost efficiency.
Active traders seeking optimized capital use can benefit from our Nifty Intraday Tip designed by professionals.
Defaulting on an FD loan may lead the bank to liquidate the deposit, so timely repayments are essential to protect your corpus.
Investor Takeaway: Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, observes that borrowing against fixed deposits provides liquidity without disturbing long-term savings and is wiser for short-term needs.
Related Queries
- How much loan can I get against my FD?
- Does an FD loan affect CIBIL score?
- Is FD overdraft better than personal loan?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
