Loan Against Fixed Deposit (FD) - Hindi - YouTube

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Namaskar, my name is Mukul and welcome to Asset Yogi.

Where we unlock the knowledge of Finance.

In this video we are going to talk about Loan Against Fixed Deposit.

We can also call it Loan Against FD.

Now see that everyone can have a requirement of money.

If there is a marriage in your house, you have to fund the education of your child.

Or you have to get work done at home,

or if there is a Medical emergency.

So in such a situation, if you have to take a personal loan from somewhere,

So Loan Against FD is cheaper than personal loan.

If suppose you have a fixed deposit in any bank,

then you can also take loan against it.

But the question arises whether you should break that FD,

or to take a loan against it.

Which of the two is more beneficial,

we will understand this with a little calculation,

that in which situation you should break the FD

and in which situation you should take a loan against FD.

And at the same time we will also see what are the important features of Loan Against FD,

how much interest rate is charged and its eligibility requirements,

how much will you get the total maximum loan against that?

For which type of FD loan is available,

and for which type of FD loan is not available.

We will also understand all these things in a little detail.

So you must watch this video from the beginning till the end.

So that you can understand the complete calculation,

and what are its important features and how should you take Loan Against FD.

So let's go straight towards a Blackboard.

So let's see, the important features of Loan Against Fixed Deposit.

After that, we will see through the calculation whether,

you should take a loan against FD or not.

or you should break the FD itself and use that money.

Before that let us see all the important features of Loan Against FD.

So this is a type of secured loan which your bank gives against your FD.

If your loan defaults if you do not pay for some reason,

So your FD can be forfeited.

Basically, it is kept as a security with the bank.

Its interest rate is 2 to 2.5 % more than the fixed deposit rate.

So suppose if your FD rate is 8%,

then the loan you will get will charge you a rate of about 10 to 10.5 percent.

After that the tenure is that for how much time you get this loan.

So whatever is the term of your FD, suppose if your FD's term was for 5 years

And if it's already been 1 year,

then if there are 4 years left then you will get this loan for 4 years.

And some banks also put extra limit in this,

some banks say that we will give maximum for 3 years only

or some bank says we will give maximum for 5 years

even if the term of your FD is more

Suppose, your FD's term is left for even 10 years,

even then they say that we will give maximum loan for 3 years or 5 years only.

We can not give more than this, it is the risk calculation of every bank.

So how is its loan repayment, there are two options in it.

One is Demand loan.

So if you want to pay EMI every month

then you can do it with demand loan option.

The second is the overdraft facility,

under which you have to pay only interest every month, on whatever the loan is.

Let's say you have a FD of 10 lakhs and you took a loan of 5 lakhs,

So this is a loan of 5 lakhs, you will keep paying interest on it every month,

if you take overdraft facility.

And this loan of 5 lakhs, you can repay this principal amount whenever you have money,

you can repay it anytime.

so it can be paid anytime.

And if suppose you do not pay this principal amount,

then whenever the maturity of your FD is

If this FD had a remaining term of let's say 4 years,

After 4 years, when this FD will be mature,

then whatever your final amount of FD of 10 lakhs was made,

suppose it was 17 lakhs,

then after deducting 5 lakhs out of 17 lakhs, you will get 12 lakhs back.

So it can also be adjust from the final maturity amount.

After this, whatever is this Tax saving FD is,

Generally, in Tax saving FDs there is lock-in of 5 years.

You do not get a loan against them, you should also keep this in mind,

then as I said earlier, the bank gives loans against whatever FD is there in its bank.

Does not give loan against FD of any other bank

You get maximum 90% of the loan amount, whatever your FD amount will be,

Suppose if you have an FD of 10 lakhs,

then you will get loan sanction up to ₹ 9 lakh.

In some banks it is up to 85%, then in that case you will get a loan of up to 8.5 lakhs.

FD can not be closed prematurely until loan is paid.

So, you should keep this thing in mind too,

if you have taken this loan against the same FD.

You will not be able to close that FD prematurely if you do not clear that loan first,

So if you assume that your FD is balanced of 4 years,

then you assume that you have taken the loan against it,

then you cannot close it after 2 years

So you have pay the loan first, only then you can close it,

now let us see what are the benefits of Loan Against FD.

Firstly, quick disbursal is done, requirement of Documentations are very less

as all your documentation is already with the bank.

So only a lien is created additionally,

lien means security is created in a way,

So if you make any default in repayment then your FD can be forfeited

For that just a document is created.

and then your credit score is not checked for this,

You get the loan directly against your FD

then if you have low credit score so you can consider it.

And as I have already discussed with you that Lien is created against FD.

Second, its advantage is that it is much cheaper than personal loan,

if you are looking to take a personal loan, then at 15 to 16 percent,

suppose you are getting this personal loan.

So the loan against FD you will get is very cheap,

you will get at least 10%.

So that's a huge saving of 5-6 percent.

There is no processing fee against this Loan

Because all the documents are already with the bank.

Prepayment charges are also not levied in most of the banks.

There is flexibility in loan repayment as we have already talked about,

you can do it on EMI or you can also only interest

and Principal amount you can pay anytime you have money,

Otherwise, money can also be adjusted from your maturity amount.

So it's was all about the benefits,

now we calculate it and see whether it actually makes sense for us or not.

So you have two options, either you break your FD and use whatever that money.

Or you can take loan against it.

So what sense does it make, so let's understand it with the help of an example.

suppose, you have an FD of 10 lakhs, you got it for 2 years.

You are getting the interest rate at 8% p.a.

After 1 year if you have a requirement of 5 lakhs,

So either you break your entire FD of 10 lakhs

Or else take this 5 lakh loan by taking loan against FD.

So, which of the two will be beneficial, let's understand it through the calculation.

First of all, pay attention if you break FD,

then, how much is your loss of interest rate.

Actually there is no loss of 8 percent, you are getting effective rate

only 5.6% because it is taxable FD.

Because the loan is not available against tax-saving FDs as we talked about earlier,

If the effective tax rate on it now if you fall in the 30% tax bracket

So your loss is only 5.6%.

And second, if you break the FD,

So most banks levy a penalty and it is usually a penalty of 1% or 0.5%.

Now, we will see the total loss, how much is there, we will understand it with an example.

So this is our total loss that if we talk about breaking FD,

then we will have a total loss of 6.6%.

If we take Loan Against FD.

So how much interest do we have to pay?

So now we assume, if FD is of 8%.

So the interest on the loan will have to be paid 10%.

If we calculate this in our example,

So, this 5.6 %, you have to calculate it at 5 lakh.

Because, the remaining 5 lakh you can invest it somewhere else,

So, your loss is 5.6% on 5 lakhs,

If we calculate this, then it is a loss of ₹ 28,000.

Then your one percent will be on 10 lakh,

this one percent, it will be over 10 lakh

because you broke the whole FD.

then you have loss of 10 thousand.

So, your total loss is of ₹ 38,000.

But if you had taken a loan for 1 year,

then how much interest will you pay for 1 year?

So by 10% on 5 lakh, the interest 50,000,

so you can see that out of 50,000 and 38,000, 38,000 and is less,

then you have less loss here,

so that is why it makes more sense for you that you break your FD

in this case and use that money,

And you will invest the remaining 5 lakh somewhere else.

Invest it in another FD.

So if I give you any advice in general, then you should

avoid loan against FD because you see the difference

of 2 percent is a very big difference.

Even if you fall in 0% tax bracket,

suppose you are not in 30% tax bracket,

Even if you are not paying any interest, an interest of 2% is enough.

it's hard to match.

Even if you lose one percent here, there is always a difference of one percent.

So that's why, but suppose if there is such a situation,

In which situation should you go for Loan Against FD,

So if your loan amount is very less, like see here your FD amount was ₹ 10 lakh.

But if this loan amount was very less,

your requirement would be from 1 lakh to 2 lakh only.

So the interest amount would have been reduced

and if you break the entire FD here,

then you would have lost more.

Because you have a direct loss of 10,000 here,

plus there is a loss in interest as well.

So within a small amount, many times it makes sense you take a loan against FD.

And if you want to take it for a very short time,

let's say you want to take it only for three to four months,

even then your interest portion will be very less.

In that case also you can take it.

If the current FD interest rate has come down

Then in that case also you can take loan against FD.

What does it mean that suppose when you got FD,

then you were getting an 8% interest rate on FD.

and you've got that locked up.

Now currently the interest rate of FD is around 6%.

then it makes more sense for you to take a loan against that

because you will make a loss of 8 percent directly.

You have already locked your interest rate.

So that's why if you want to take small amount,

you want to take it for a short time

and if the current interest rates of FD is less,

So suppose if you break your FD and you will invest this 5 lakh.

you will be able to invest only at 6%.

Even there you are getting a loss of two percent.

You can do your cost benefit analysis in this way, whatever fits your situation.

Like I showed you the calculation here,

You can also calculate for your situation in this way,

according to whichever of the two, you feel is beneficial you must choose.

You Blindly Don't Take Loan Against FD.

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