There are several benefits of opening a fixed deposit. It offers you guaranteed returns, keeps your funds safe, and provides high liquidity. However, there’s one more benefit you probably didn’t know about. You can leverage your FD to secure a loan. Surprised?
If you’re planning to buy a second-hand car, several financial institutions offer affordable used car loans against FD. This loan is seen as an overdraft facility on your fixed deposit and is a convenient way of ensuring you have the funds for your purchase.
In this article, we will break down everything you need to know about a used car loan on FD.
What is a used car loan on fixed deposit?
A car loan against FD is a type of secured loan where you can pledge your fixed deposit against the loan. This type of vehicle loan isn’t a conventional loan and is usually considered to be an overdraft facility on your FD account. Moreover, you continue to earn interest on your deposit even with the loan, so you don’t have to liquidate your funds or lose out on the interest payment.
However, the amount of the approved loan depends upon the FD amount, and the lender might sanction up to 90% of the FD amount as the loan. The best part? You can enjoy competitive used car loan interest rates.
How to apply?
Applying for a second-hand car loan on your FD is extremely convenient. It involves less paperwork and offers swift approval. Most lenders today offer a hassle-free online application process. Depending upon your lender, you might only need to fill out an application form and furnish a few documents, including FD receipts, to get a loan.
Additional Read: All You Need To Know About Used Car Loans
Benefits of availing a loan against fixed deposit
• No processing fee
In most cases, lending institutions don’t require you to pay any processing fee. This makes it an excellent choice as it will help bring down the overall cost of borrowing. Moreover, there may be other charges like pre-payment charges. So it’s best to get in touch with your lender before applying.
• Competitive interest rates
As opposed to other types of loans, interest rates in car loan against fixed depositis much lower, making it an economical loan option. Moreover, such an interest rate is charged above the applicable FD rate.
• Easy loan repayment
With a loan against your FD, you can choose the repayment tenure as per your affordability. This allows you to repay the loan comfortably while managing your finances. However, your loan period cannot exceed the fixed deposit tenure.
For instance, if you have a term deposit of five years, your loan tenure can range anywhere between one to five years.
Additional Read: Want a Used Car Loan? Here’s What You Should Know
Planning to buy a used car? Instead of dipping into your savings, go for affordable loan offerings from Tata Capital. Enjoy competitive interest rates, flexible EMI structure, and extended loan tenure up to 60 months! Besides, with quick loan processing, financing your first car is now easier than ever!
Use our used car loan EMI calculator to get an estimate of your monthly finances. Get in touch with us today!