Get a Personal Loan against Fixed Deposit

By: Unknown on 03:40

Managing liquidity is an important aspect of personal finance planning. Even individuals with good investment portfolios find it difficult to manage liquidity. A sudden requirement of cash can push one into a situation where he/she may have to sell assets, sometimes at a discount to fair value. However, if smartly used, the traditional bank fixed deposits can come to your rescue. Banks offer personal loans against bank fixed deposits and you can raise short-term money without breaking your fixed deposits.

Another advantage that the borrower enjoys is the low interest rate, compared to other personal loans. Most banks offer personal loans at an interest rate ranging between 16% and 24%. But a personal loan taken against a fixed deposit ensures that you pay just 1% more than the rate of interest payable by the bank on the fixed deposit. For example, if a bank pays 9% interest on a three-year fixed deposit, the rate of interest payable on the personal loan raised against it will be 10%. This saves a lot of money that you would have paid as interest, had it been a traditional personal loan, backed by no security.

via.www.businessinsider.in