The Fixed Deposit
It goes without saying that managing liquidity and the assets is a crucial aspect of the personal financial planning. But it is often seen that those with handsome business portfolios find it tough to tackle liquidity of funds. You never know when a sudden need of cash can compel you to a situation where you see that there is no other way than to sell off your assets in exchange for an amount which is lower than the actual value. Fortunately, enough, the traditional bank deposits can come to your rescue at those difficult moments.
Reaping the Benefits of Fixed Deposits There are numerous banks and notable NBFCs that offer fixed deposits and allow to take a personal loan against FD. You can raise money in a small amount of time without breaking the Fixed Deposit.
Lowered Rate of Interest: One benefit of taking a personal loan against fixed deposit is that you can enjoy a lower rate of fixed deposit than regular personal loans. You can get a loan by paying 1% higher than the rate from Fixed Deposit. This saves a lot of money which you can use to pay interest on the loan.
Easy to Obtain: It’s pretty simple to get a personal loan from Fixed Deposit. It generally takes less than a day. You’ll just have to submit the application form and some necessary documents like identity proof and certificate of deposit.
No Prepayment Penalty: You won’t have to pay any penalty charges if you want to prepay the personal loan amount before the specified date. The lending authority can charge a small processing fee, but you can get some banks that waive it.
Overdraft Facility: This facility against Fixed Deposit lets borrowers access liquidity. You can access the funds for some time and repay before its time. You’ll continue to receive the benefits of the Fixed Deposit while managing expenses with the loan against the deposit.
Manage Cash Crunch: Ever since demonetization in November, the economic situation hasn’t been stable. The cash crunch is still present. In this situation, if you take personal credit from your deposit, you can manage any urgent expenses effortlessly.
If you take a personal loan against a Fixed Deposit, you should look for ways to raise short term money. That’s because if you fail to repay the loan on time, you may end up losing the deposit since the bank would foreclose it to repay the money you’ve lent. That affects the CIBIL report. So, you should make sure to raise your funds to pay back the loan amount in time.
Taking out a personal loan on your Fixed Deposit is one of the best choices that you can make when it comes to maintaining your deposit and still taking out the loan you need.
Aman is working in the domain of Investment management in one of the top universities. He has published research papers and case studies in Investment and Fixed Deposit marketplace. He is an avid blogger in the domain of Investment management. you can also find him on social networking platforms.