Foreclose Your Loan Against FD
A loan against an FD is that type of loan where a person borrows money from a bank by keeping their Fixed Deposit as security. The bank gives the loan up to a certain percentage of the value of the FD. This loan facility is very helpful in fulfilling the short-term financial needs without breaking borrowers' FD and losing interest benefits.
What is Foreclosure of Loan Against FD?
Foreclosure of a loan against a Fixed Deposit refers to the process of closing the loan before its maturity date. If a person has enough funds to pay the outstanding loan amount along with applicable interest or charges, then the loan will be foreclosed. After the foreclosure, the bank releases the full Fixed Deposit amount to the depositor.
How to Foreclose Your Loan Against FD?
You can easily repay and close your loan against a Fixed Deposit by following the steps given below:
Step 1: Check out your outstanding loan amount (including interest).
Step 2: You need to submit a request either online or by visiting the branch to close your loan.
Step 3: Pay the outstanding loan amount.
Step 4: You will receive confirmation of loan closure or a Dues Certificate (NDC).
Step 5: Your Fixed Deposit amount will be released after the loan is closed.
Note: The aforementioned steps are the general steps to foreclose the loan, and it may vary from bank to bank or any financial institution.
FAQs on Foreclose Your Loan Against FD
- Are there any charges for foreclosing a Loan Against FD?
No, generally banks do not charge any penalty for FD loan foreclosure. But for a better understanding, you must contact your bank.
- What happens if I do not repay the loan on time?
In case you fail to pay your loan on time, then the bank may adjust the outstanding loan amount against your FD to recover dues.
- How much loan can I get against my Fixed Deposit?
You can typically get a loan up to 90% of your FD amount. However, it also depends on the bank’s terms and conditions. Therefore, you must contact your bank or financial institution to get accurate details.
- What documents do I need to take a loan against a Fixed Deposit?
In order to get a loan against a Fixed Deposit, you will require an original FD receipt or Passbook, KYC (PAN, Aadhaar), Account Statement or Proof of Identity and Proof of Address.
- Is the loan interest rate higher than the FD interest rate?
Yes, when you get a loan against your fixed deposit, then you generally have to pay an interest rate which is 1% to 2% higher than your FD interest rate.
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