To manage your finances and boost your savings, you must plan effectively. Liquidity should be carefully handled because lifestyle and standard of living changes might alter consumption patterns. Additionally, it's possible that you'll spend most of your savings on unanticipated costs and other crises. Selling your financial assets in such circumstances is a dependable choice. Those without a stable source of income can use a personal loan when they need money right away. Obtaining a personal loan is also possible for a number of additional reasons, including covering wedding-related costs, funding children's education, buying household goods, taking trips, upgrading your property, and more. Since no financial assets are pledged as security for a personal loan, the interest rates are comparatively higher. But the question here that comes is whether to take a personal loan or go for a loan against your fixed deposit. This article will let you choose the best suitable one for you.
Personal loan or loan against FD - Know the difference
between the two
Loan interest rate: Compared to loans secured by fixed deposits, personal loans have a
substantially higher interest rate. In most banks, the interest rate on fixed
deposits is quite uniform. Therefore, you will pay a 2% to 2.5% higher rate of
interest if you take out a loan against a fixed deposit than you would
otherwise. In contrast, the interest rate on a personal loan
can range from 14% to 30% annually, which is far too expensive compared to the
interest rate on loan against a fixed deposit. Therefore, loans secured by
fixed deposits are less expensive than even personal loans with lower interest rates.
Maximum loan amount: For personal
loans and fixed deposits, the maximum loan amount is varied. You may
deposit as much as 90% of the FD amount in fixed deposits. The loan amount for
a loan against a fixed deposit, however, varies from bank to bank and mostly
depends on the bank's judgement. However, the loan limit for personal loans is
determined by the borrower's profile and capacity for repayment. Therefore, in
accordance with your profile and monthly pay, you may be eligible for a greater
or lesser loan amount. However, with a fixed deposit, the loan amount is based
on the deposit amount.
Tenure of the loan: The maximum tenure of a loan against a fixed deposit
should not be more than the maturity time of the fixed deposit. You may obtain
a loan for a maximum of 20 years if your fixed deposit is for 20 years. However,
the maximum borrowing term for personal loans is six years. If you are availing of a personal loan, you cannot
take out a loan for longer than 6 years. As a result, the fixed deposit's
tenure gives you more temporal flexibility than the personal loan's tenure.
The process of getting a personal loan
You should shop
around before applying for an online rapid personal loan to make sure you get the greatest
price. To receive the money you require, follow these instructions.
Do your research on many lenders: You should examine the terms and rates
offered by other lenders. Start by looking for lenders who provide instant
loans online.
Select a lender: Examine the terms of each lender after you've reduced
your list of choices. To make an informed decision, remember to consider the
interest rates, costs, and payback conditions.
Apply for the loan: After deciding on a lender, you must fill out the
application. You should anticipate giving basic information like your name,
address, and contact details. However, this varies from loan to lender.
Wait for the application review - A few days will probably pass while your
application is being reviewed before you receive a response. Some lenders may
accept you immediately, but most will consider your application for a few days.
Receive your funds - When the lender approves your application, they'll
deposit the money directly into your bank account.
The documents required for a personal loan
You must have the
following documents to apply
for a personal loan and prevent any unusual delays or problems.
● Pan Card, Aadhar Card, Passport, and other
forms of identification and age verification
● Three-month pay slips as proof of income.
● Aadhar cards, driver's licence, passports, and
other documents as evidence of address.
● A picture of yourself
Great breakdown of the choices between personal loans and loans against FD! Your blog provides a clear comparison, outlining the pros and cons of each option. Understanding factors such as interest rates, eligibility criteria, and the impact on savings is crucial for making an informed decision. The insights offered here will undoubtedly help readers navigate the choice between a personal loan and a loan against FD based on their unique financial circumstances. Well-articulated and informative—thanks for simplifying this decision-making process!
ReplyDelete