Check out our most Popular Searches
Choose The Product You Are Applying For
Check out our most Popular Searches
Choose The Product You Are Applying For
Comparision Between a Personal Loan and Loan Against FD
During an unexpected financial crisis, we often get confused regarding the type of credit we should get. There is a considerable debate about whether a Personal Loan or a loan against FD is better. While both have pros and cons, you must choose the one that best aligns with your requirements. This blog provides detailed information on the key difference between a Personal Loan and a Loan against FD. Read on to make an informed decision.
A Personal Loan is an unsecured credit facility where you can borrow funds without pledging any asset as collateral. It has no end-use restrictions, and you can use it for any purpose, from home renovation to medical emergencies.
However, remember that there may be repercussions if you fail to repay the loan. Your credit score may be highly impacted, making you ineligible for any credit facilities in the future, or it can increase the cost of borrowing. Alternatively, the lending institution may also file a lawsuit against you.
A loan against FD is a type of credit facility that allows you to borrow money from a bank or financial institution against the value of the FD. The interest rate is lower than that of an unsecured Personal Loan, as lenders use your FD as security in case you default.
Furthermore, you can enjoy regular FD interest on the pledged fixed deposit and have the flexibility to repay the loan via instalments or lump sum. The loan tenure is equivalent to the tenure of the FD and must be repaid in full before the FD matures.
Once the loan is paid in full, you can access the fixed deposit and withdraw the required amount. However, in the event of defaults, the financial institution has full authority to liquidate your FD and recover the outstanding amount.
Also Read - How Does Age Influence Your Eligibility to Take a Personal Loan?
Following are some key differences between a Personal Loan and a loan against FD.
|
Factors |
Personal Loan |
Loan Against FD |
|
Tenure of the Loan |
Up to sixty months. |
Till the maturity of your Fixed Deposit. |
|
Documents Required |
Address proof, identity proof and income proof documents. |
No extra documents are needed. |
|
Collateral Requirement |
Collateral-free. |
The fixed deposit here acts as collateral and can be liquidated by the lender in the event of defaults. |
|
Foreclosure Charges |
It varies from lender to lender. Some lenders do not levy foreclosure charges. |
No foreclosure charges. |
Personal Loans and loans against FD have pros and cons. You must pick the one that suits your financial well-being. If you are looking for funds with lower interest rates, a loan against FD may be suitable. However, a Personal Loan may be the right choice if you need a high loan amount without pledging any collateral. Ensure you apply for a Personal from a trusted lender like Poonawalla Fincorp. Check how to apply in the next section.
Step 1: Click on 'Apply Now'.
Step 2: Fill out the application form.
Step 3: Upload all the necessary documents.
Upon verification, the loan amount will instantly be credited to your bank account.
A loan against FD allows you to get funds at lower interest rates, but it requires you to pledge the fixed deposit as a security. The lender may liquidate your FD if you default. On the other hand, a Personal Loan is collateral-free and comes with a high loan amount, minimal documentation, and flexible repayment tenure. For a hassle-free Personal Loan application, choose your trusted lending partner, Poonawalla Fincorp. Apply now!
We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Personal Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply
Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.
A medical emergency can happen at any time. Sometimes paying a medical bill right away is not easy. This is a problem even when you have medical insurance. This may be because the plan you have will not be able to recover all the expenses
Getting a personal loan approved has become a much simpler process. You can easily get a personal loan with minimal documentation. Having said that, you need to have a precise understanding of how to repay your loan quickly.
Why do individuals, firms and businesses choose to borrow money from lenders? This is all because we need the money for all the situations.
Many times, you may find that your earnings are not enough to meet the urgent expenses. A Personal Loan can help you manage your situation better and save the day!
As per capita income increased in India, people started spending more on cars. If you are planning to take a loan to buy a new car, then you need to approach the lending market for a suitable car loan.
