banner image personal loan vs loan against fd

Personal Loan Vs. Loan Against FD: Which One is Better?

January 17, 2024 • 749 views

According to a survey, about 67% of Indians are reliant on Personal Loan for their emergency funding needs. However, many struggle to research and choose the best loan options to cater for their specific needs. If you are confused about whether to choose a Personal Loan and a loan against FD, the blog covers the solution. Read on to get a thorough comparison between a Personal Loan vs. Loan against FD.

What is a Personal Loan?

A Personal Loan is a type of credit where you do not need to provide collateral or security. The application process is simple with minimal documentation requirements. Additionally, there is no restriction on the use of loan amount.

What is a Loan against FD?

A Loan against FD is a type of short-term debt provided by financial institutions as an overdraft facility for customers. The loan limits are based on the amount deposited into your account. However, the interest charged are higher than that of FD rates.

Personal Loan Vs. Loan against FD - Which One is Better?

Following are some of the 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

Required Documentation

Address proof, identity proof and income proof documents

No extra documents needed

Amount of your Loan

Up to Rs. 30 Lakh*

Up to 90% of your Fixed Deposit amount

Processing Fees

Up to 2% of your loan amount

Depends upon the financial institution

Interest Rates

Starts from 9.99%* p.a.

2% to 5% higher than the return rates on your Fixed Deposit

 

Upon getting a loan against a Fixed Deposit your years of savings will evaporate. This can make it difficult to fulfil the purpose for which you have started the FD in the first place. So, it would be prudent to go for a Personal Loan and keep your FD safe.

Since there is complete flexibility to customize your Personal Loan, you can adjust the loan amount and repayment tenure easily. Also, you will get various additional benefits upon availing this credit type.

*Note – Please note that the mentioned amount and interest may differ from lender to lender.

Features and Benefits of Personal Loan

There are numerous advantages that borrowers can get upon availing a Personal Loan. Some of the primary Personal Loan benefits include:

  • No Requirement for Collaterals: Avoid collateralizing your valuable assets to cover financial urgencies.
  • Quick Approval and Disbursal: Fulfil the eligibility criteria and submit an error-free application to get money in your bank account.
  • Competitive Interest Rates: Secure interest rates starting from 9.99%* p.a. and repay your loan with affordable EMIs.
  • No Restriction on Fund Use: Use the loan money to cover any financial needs of your choice.
  • Zero Foreclosure Charges Present: Foreclose your credit whenever you want without having to pay extra.

*Note – Please note that the mentioned amount and interest may differ from lender to lender.

Eligibility Criteria for Personal Loan

The eligibility criteria for availing of any Personal Loan are as follows:

  • Nationality: Indian
  • Age: 22 years to 57 years
  • Work Experience: At least one year of Job experience and at least one month of stable employment at the current firm
  • Net Income Per Month: Monthly salary of at least Rs.30,000.
  • Credit Score: A good score beyond 750
  • Employment: A full-time job at a public or private sector company or an MNC

Also Read - How Does Age Influence Your Eligibility to Take a Personal Loan?

Documents Required for Personal Loan

The documents required for Personal Loans are as follows:

  • Income Documents: Last three months’ salary slips
  • KYC Documents: PAN Card, Passport, Aadhaar Card, Voter ID, Driving License
  • Financial Documents: Last three months’ bank statements
  • Current Address Proof: Rent Agreement, Passport, Utility Bills
  • Proof of Employment: Official email ID, Employee ID card

However, while applying for a Personal Loan, you may be asked for additional information to verify your identity and credibility for the loan apart from the above-stated papers.

How to Apply for a Personal Loan?

Getting a Personal Loan is easy and can be completed within 5 minutes. You can follow the steps below to apply for a Personal Loan:

  • Step 1: Click on the ‘Apply Now’ button and move to the application form.
  • Step 2: Enter your basic details and upload the required documents.
  • Step 3: Cross-check the details and hit the ‘Submit’ button.

Also Read - What is Personal Loan? Things You Should Know

To Conclude

Both Personal Loans and loan against FDs offer various benefits to a borrower. However, considering the comparison between a Personal Loan vs. loan against FD, it is quite clear that a Personal Loan would help you manage your expenses conveniently. For additional advantages, select reputable financial institutions such as Poonawalla Fincorp for better loan terms.

Apply for a Poonawalla Fincorp’s Personal Loan and fulfil your immediate fund needs!

Disclaimer

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

poonawalla fincorp team

Poonawalla Fincorp Team

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.

Trending Topics



Contact Us logo Quick Apply CIBIL Score logo Free CIBIL Whatsapp logo Connect on WhatsApp