Home Investments Fixed Deposit How To Get Loan Against Fixed Deposit ?

How To Get Loan Against Fixed Deposit ?

Loan Against Fixed Deposit

What is Loan Against Fixed Deposit?

Fixed deposit is probably the most popular financial instrument when it comes to parking money in India. A slow but a steady rise in the principal while being secure is the feature of fixed deposits. Also, it is called fixed deposit because the deposit cannot be withdrawn for the period agreed. In times of need, one can avail what is called as loans against the fixed deposit you hold in a certain bank for a certain simple interest that is mutually agreed upon by the bank and the client.

How much?

Anywhere between 70-90% of the value of the fixed deposit will be sanctioned by the banks. All the banks have at their discretion to decide on the amount of the loan to be disbursed.


The cost is the interest which is usually 2-2.5% more than the interest the bank pays for the fixed deposit. Then again, a lot of other factors play a role when it comes to the interest charged. The agent dealing with this is given a free hand to fix an interest in the range that will be given by the bank. The higher the interest, the better incentive the agent gets. There is a lot of room for negotiation as far as the interest is concerned. The other factor regarding the interest is the ownership of the fixed deposit. If the borrower owns the fixed deposit then the interest is around 2%. The interest is around 3% when the fixed deposit belongs to a third party.

For how long?

It depends on the term of the fixed deposit and the term time lapsed at the time of your loan application. If the fixed deposit is 3 years and the tenure required is 2 years, the loan should be disbursed at the end of one year of the fixed deposit tenure. The fixed deposit can also be renewed along with which the loan tenure can be extended depending the new fixed deposit tenure.

Why loan against fixed deposit?

The interest charged for personal loans vary anywhere between 16-24% per annum. The interest charged for the loan against fixed deposit is just a percent or two more than the rate the bank pays for the fixed deposit. Banks usually pay around 9% per annum for fixed deposits. In that case loans can be availed at interests as cheap as 10-11%.


The processing time is usually just one day for loans against fixed deposits. An application is to be filled by the applicant and the fixed deposit owner in case of a third party owning the fixed deposit. The fixed deposit should not be in a minor’s name. Another thing to remember when it comes to third party fixed deposits, the owner of the fixed deposit must be a co-applicant for the loan against fixed deposit.

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  1. Great article! I never knew that applying for a loan was this easy and beneficial. I feel it is wise enough to go for a loan against fixed deposit as the interest to be paid is less, it is easy to get the loan approved and can provide us the amount immediately. Though there are few terms and conditions, I am sure they can be satisfied easily.


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