This loan is Best for Emergency situations – Low cost and No time. May sound unrealistic, but it is true.
This is the lowest cost loan available from Bank, no question on credit rating, no due diligence is required from Bank on repayment ability. This option is handy, affordable and quick for the customers. Banks like SBI, ICICI, AXIS Bank, HDFC Bank, Bank of Baroda, Federal Bank offers this option. Please check your internet banking section or speak with the nearest Bank branch to get more information.
Overdraft Facility on Fixed Deposit: Lowest Cost Loan
On emergency situation, education or business needs loan helps us sail through unplanned expenses. However, often in time as such, we end up taking a hasty decisions on swiping credit card or taking expensive Gold loan from NBFCs. While these loans can be taken quickly, it often have very high interest cost, and non-payment or long term EMI option can turn very expensive option.
Federal Bank is offering OD Facility against Recurring Deposit too
Bank offers this option which is rarely used by the savings bank customers. Many big Banks offer Overdraft facility against Fixed deposit or term deposit. And the interest rate is 1-2% higher than the interest rate you are getting on the fixed deposit.You can easily apply for the OD on your term deposit through Net-Banking.
Who can take OD against FD or term deposit?
This loan option can be taken by any account holder who has a fixed deposit with the Bank, except 5 year term Tax Saver Fixed Deposit
The loan amount is capped at 80% – 90% of the Fixed Deposit amount. For Example – Axis Bank has a cap of 85% on the Fixed deposit, Yes Bank OD has 90% cap on the loan.
Features of Over draft against Fixed Deposits
No processing fee
Low interest cost
Banks may have the individual OD eligibility criteria of minimum fixed deposit and Maximum OD limit etc
While taking OD, your FD will continue to earn interest.
Its a flexible option, one can take any amount up to the cap amount
One can withdraw multiple time and repay multiple time
Loan interest is charged daily basis, and only charged on the outstanding amount.
If Overdraft is not availed, no interest charges are applied
The loan tenure can be be up till the term of the fixed deposit
No Pre-payment charges
One needs to have a Fixed deposit of the same Bank to avail the overdraft facility
This loan is much cheaper than unsecured personal loan or instant credit card loans. For Overdraft Against Term Deposit, the interest rate will not depend on the credit score, but on the interest rate of the Fixed Deposit.
