Many a time, during a crisis or emergency need, a person has to depend on loans. A loan is a sum of money that is borrowed by a company or an individual from any bank or financial institution. The institution charges certain interest according to the debt and duration. The institution has certain terms and conditions, to which the borrower has to agree. Loans can be of various types such as car loans, house loans, gold loans, business loans, credit cards, etc. While borrowing a certain amount, something is pledged. In the case of a car loan, it is the car, in the case of a home loan, it is the house, and so on. One such loan is ‘ loan against fixed deposit’. Let’s discuss this in brief.
A loan against fixed deposit (FD) is a type of loan in which, people pledge their deposits, to get money. The loan amount can be up to 90% of the deposit amount. The loan present can vary according to the policies of the bank or financial institution. This does not require you to break the deposit bond, instead, you get the money against it. This is more of a type of personal loan.
How to get this loan in UAE:
- To apply for this loan, you need to have a Fixed Deposit (FD) in the same bank or financial institution.
- Fill the assigned form and attach the required documents along with the receipt of the fixed deposit.
- The bank will verify the details in the assigned time and you will get the loan.
Who can get the loan:
- This loan is available for everyone irrespective of occupation, credit score, or income. The only condition is that the person should have a fixed deposit.
- Single, as well as joint account holders, are allowed for this loan.
Some of the advantages of a loan against fixed deposits (FD)
- The low salary of a person makes the loan obtaining process not less than a dream for him. Due to this, many necessaries just remain some untold stories. No need to worry about it because the best feature of this loan is that, it is independent of one’s salary and occupation.
- Sometimes maintaining a credit score is difficult especially when you have been a victim of fraud, skimming, or phishing. While applying for this loan, a good credit score is not a necessity.
- The loan approval process and time taken during this often haunt the people. This loan against fixed deposit (FD) is approved much easier than any other loan. Sometimes, you can even get the amount in your account within few days after applying.
- When people get this option of obtaining a loan, they get scared because they think that they will have to break their fixed deposit bond. This is not true as for this loan, there is no need of breaking the fixed deposit bond or premature withdrawal.
Just like every coin has a head and a tail, a loan type also has advantages and disadvantages. Let’s look at some of the disadvantages of this type of loan.
- The loan has to be repaid before the expiry of the tenure of the Fixed Deposit (FD). In any case, it cannot exceed the time.
- If the borrower fails to return the money which is taken, the bank or the institution has the full right to confiscate the fixed deposit and recover the money which was lent.
- If a person does not has a fixed deposit (FD), then this loan can prove to be an expensive deal. For this, it is better to go for a personal loan rather than a loan against a fixed deposit (FD).
After knowing everything about loans against fixed deposit (FD), let’s look at some of the banks in UAE to make this clearer.
Federal Bank
- When you submit your documents successfully, the finance requires three to five days to be approved.
- The interest rate ranges from 5% to 7% depending upon the borrower’s profile.
- The processing fee will be 1% of the total amount.
- The loan amount ranges from AED 50,000 to AED 5,000,000.
- You do not need a bank account with the bank, to apply for a loan against a fixed deposit (FD).
Commercial Bank of Dubai
- In this bank, the highest loan amount will be 90% of the fixed deposit or value of AED 20 million. From these two, whichever is less will be taken into consideration.
- A UAE resident should be between 21 years to 70 years at the time of loan maturity.
- All nationalities are eligible to get the loan against fixed deposit (FD).
- Both self-employed or salaried person is eligible to get this loan.
Now, this is all you need to know about loans against fixed deposit (FD). Never go for one type of loan in a hurry. Always consider compare loans and financial institutions and after comparing choose the one which suits you the best. Now you are ready to go for a happy loan experience.
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