{"id":2019,"date":"2026-09-30T09:00:00","date_gmt":"2026-09-30T03:30:00","guid":{"rendered":"https:\/\/www.taptaploans.in\/blog\/?p=2019"},"modified":"2026-09-29T23:09:18","modified_gmt":"2026-09-29T17:39:18","slug":"loan-against-fd","status":"publish","type":"post","link":"https:\/\/www.taptaploans.in\/blog\/loan-against-fd\/","title":{"rendered":"Loan Against FD: Interest Rate, Eligibility, and When It Beats Breaking Your FD"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">A <strong><a href=\"https:\/\/www.taptaploans.in\/blog\/personal-loan-vs-gold-loan\/\">loan against FD<\/a><\/strong> lets you borrow money using your fixed deposit as security. You can usually get 75% to 90% of the deposit value. The interest rate is typically just 1% to 2% above your FD rate. Your FD stays intact and keeps earning interest. For many people, it&#8217;s one of the cheapest and safest ways to borrow in India.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If you have an FD and need money, read this before you break it or take a costly personal loan.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What Is a Loan Against FD?<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Your fixed deposit acts as collateral. The bank puts a lien on it. That means you can&#8217;t withdraw the FD until the loan is repaid. But it still earns interest as usual.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Because the bank is fully covered, it takes almost no risk. That&#8217;s why rates are low, and approval is quick.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Most banks offer this in two formats:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th><strong>Format<\/strong><\/th><th><strong>How it works<\/strong><\/th><th><strong>Best for<\/strong><\/th><\/tr><\/thead><tbody><tr><td>Term loan<\/td><td>Fixed amount, repaid in EMIs<\/td><td>A one-time expense<\/td><\/tr><tr><td>Overdraft against FD<\/td><td>A credit limit; pay interest only on what you use<\/td><td>Irregular or short-term needs<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">An overdraft is often the smarter choice. You only pay interest on the days you actually use the money.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Loan Against FD Interest Rate<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Here&#8217;s the simple formula most banks use:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Loan rate = Your FD rate + 0.5% to 2%<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So if your FD earns 7%, your loan might cost around 8% to 9%. Compare that with other options:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th><strong>Type of borrowing<\/strong><\/th><th><strong>Typical annual cost<\/strong><\/th><\/tr><\/thead><tbody><tr><td>Loan against FD<\/td><td>FD rate + 1% to 2%<\/td><\/tr><tr><td><a href=\"https:\/\/www.taptaploans.in\/blog\/personal-loan-vs-gold-loan\/\">Gold loan<\/a><\/td><td>Around 9% to 18%<\/td><\/tr><tr><td><a href=\"https:\/\/www.taptaploans.in\/blog\/what-is-a-personal-loan\/\">Personal loan<\/a><\/td><td>Around 10.5% to 24%<\/td><\/tr><tr><td>Credit card revolving<\/td><td>Around 36% to 45%<\/td><\/tr><tr><td>Short-term app loans<\/td><td>Can exceed 100%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">The exact <a href=\"https:\/\/www.axis.bank.in\/loans\/loan-against-fixed-deposit\"><strong>loan against FD interest rate<\/strong> <\/a>depends on your bank and the FD&#8217;s rate. Always check with your own bank first.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>How Much Can You Borrow?<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Most banks allow <strong>75% to 90%<\/strong> of the FD value. Some go up to 95%.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For example, if your FD is \u20b92,00,000 and the bank allows 90%, you can borrow up to \u20b91,80,000.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The loan tenure usually can&#8217;t go beyond the FD&#8217;s maturity date.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Loan Against FD vs Breaking Your FD<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Many people just break the FD. Let&#8217;s see if that&#8217;s actually cheaper.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Say you have a \u20b92 lakh FD at 7% with one year left. You need \u20b91.5 lakh for three months.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Option A: Break the FD<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>You lose part of the interest you would have earned.<\/li>\n\n\n\n<li>Most banks also charge a premature withdrawal penalty, often 0.5% to 1%.<\/li>\n\n\n\n<li>You lose the higher locked-in rate if rates have fallen since.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Option B: Take a loan against FD at 8.5%<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Interest for three months on \u20b91.5 lakh \u2248 \u20b93,190.<\/li>\n\n\n\n<li>Your full \u20b92 lakh keeps earning 7% the whole time.<\/li>\n\n\n\n<li>Your FD rate stays locked.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">For short needs, the loan often costs less than breaking the FD. For long needs, breaking might be simpler. Do the math for your case.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Loan Against FD Calculator: A Quick Way to Estimate<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">You don&#8217;t need a fancy tool. Use this simple method:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Interest cost \u2248 Loan amount \u00d7 Rate \u00d7 Months \u00f7 12<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Example: \u20b91,00,000 \u00d7 8.5% \u00d7 6 \u00f7 12 = \u20b94,250 for six months.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For an overdraft, use only the amount and days you actually used. That makes it even cheaper.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Eligibility and Documents<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">This is one of the easiest loans to get:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>You must be the FD holder, or a joint holder with consent.<\/li>\n\n\n\n<li>The FD must usually be with the same bank.<\/li>\n\n\n\n<li class=\"has-text-dark-color has-text-color has-link-color wp-elements-1\"><a href=\"https:\/\/www.taptaploans.in\/blog\/personal-loan-with-low-cibil-score\/\">CIBIL score<\/a> is rarely a major factor, since the loan is fully secured.<\/li>\n\n\n\n<li>Minor FDs and some tax-saver FDs may not qualify.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Documents are minimal. If you&#8217;re already a customer, many banks let you apply in their app or net banking. Money can arrive the same day.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Note: 5-year tax-saving FDs usually can&#8217;t be pledged. <a href=\"https:\/\/www.taptaploans.in\/?utm_source=website&amp;utm_medium=homepage&amp;utm_campaign=homepage_lending&amp;utm_id=lending+homepage&amp;utm_term=first_lending\">Check before you plan <\/a>around one.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Pros and Cons of a Loan Against FD<\/strong><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Pros<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Low interest rate<\/li>\n\n\n\n<li>Quick approval, often online<\/li>\n\n\n\n<li class=\"has-text-dark-color has-text-color has-link-color wp-elements-2\">No big dependence on <a href=\"https:\/\/www.taptaploans.in\/blog\/can-you-get-a-personal-loan-with-a-low-cibil-score\/\">CIBIL score<\/a><\/li>\n\n\n\n<li>Your FD keeps earning<\/li>\n\n\n\n<li>Usually no prepayment charges<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Cons<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Limited to your FD amount<\/li>\n\n\n\n<li>The FD is locked until you repay<\/li>\n\n\n\n<li>If you don&#8217;t repay, the bank can adjust the FD<\/li>\n\n\n\n<li>The FD interest is taxable, while loan interest usually isn&#8217;t deductible<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>When a Loan Against FD Is the Smart Choice<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">This is one of the options we suggest most at TapTap Loans. It works well when:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>You need money for a short time, like 1 to 12 months.<\/li>\n\n\n\n<li>You want to avoid a high-cost personal loan or app loan.<\/li>\n\n\n\n<li class=\"has-text-dark-color has-text-color has-link-color wp-elements-3\">Your <a href=\"https:\/\/www.taptaploans.in\/blog\/credit-score-in-india\/\">credit score<\/a> is low, and banks are rejecting you.<\/li>\n\n\n\n<li>You want to clear an expensive debt, like credit card dues.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Here&#8217;s a real-world style example. Someone owes \u20b980,000 on a <a href=\"https:\/\/www.taptaploans.in\/blog\/credit-card-minimum-payment-trap\/\">credit card<\/a> at 42% a year. They have a \u20b91 lakh FD. A loan against the FD at around 8.5% clears the card. They save thousands in interest every month.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">That&#8217;s what better guidance looks like. Use the cheapest money you already have access to.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>When to Avoid It<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">It&#8217;s not the best fit if:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>You need money for many years. The FD may mature first.<\/li>\n\n\n\n<li>The FD is your only emergency fund, and the need isn&#8217;t urgent.<\/li>\n\n\n\n<li>You&#8217;re using it for risky things, like trading or speculation.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Frequently Asked Questions<\/strong><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1790589012101\"><strong class=\"schema-faq-question\"><strong>What is the interest rate on a loan against FD?<\/strong><br><br><\/strong> <p class=\"schema-faq-answer\">Most banks charge 0.5% to 2% above your FD rate. So if your FD earns 7%, the loan against FD may cost around 7.5% to 9% a year.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790589042070\"><strong class=\"schema-faq-question\"><strong>How much loan can I get against my FD?<\/strong><br><br><\/strong> <p class=\"schema-faq-answer\">Usually 75% to 90% of the FD value. Some banks allow up to 95%. The exact limit depends on your bank&#8217;s policy.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790589055856\"><strong class=\"schema-faq-question\"><strong>Does a loan against FD need a good CIBIL score?<\/strong><br><br><\/strong> <p class=\"schema-faq-answer\">Not usually. Because the FD fully secures the loan, banks focus less on your credit score. It&#8217;s one of the easier loans to get with a low score.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790589065702\"><strong class=\"schema-faq-question\"><strong>Is it better to take a loan against FD or break the FD?<\/strong><br><br><\/strong> <p class=\"schema-faq-answer\">For short-term needs, a loan against FD often costs less, because your FD keeps earning and you avoid the premature withdrawal penalty. For long-term needs, breaking it may be simpler.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1790589083608\"><strong class=\"schema-faq-question\"><strong>Can I take a loan against FD from another bank?<\/strong><br><br><\/strong> <p class=\"schema-faq-answer\">Most banks only lend against FDs held with them. If your FD is elsewhere, check with that bank first.<\/p> <\/div> <\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Conclusion<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">A loan against FD is simple, cheap, and fast. You keep your savings, you keep earning interest, and you borrow at a rate close to your FD rate.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Before you break a deposit or take a costly loan, check this option with your bank. For short-term needs and for clearing expensive debt, it&#8217;s often the smartest move.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/www.taptaploans.in\/salaried?utm_source=website&amp;utm_medium=website_newloan&amp;utm_campaign=newloan_lending&amp;utm_id=get_a_newloan&amp;utm_term=getanewloan_lending\"><em><strong>Check Tap Tap Loans across 20+ lenders<\/strong>.<\/em><\/a><\/p>\n\n\n<div class=\"yoast-breadcrumbs\"><span><span><a href=\"https:\/\/www.taptaploans.in\/blog\/\">Home<\/a><\/span> \u00bb <span class=\"breadcrumb_last\" aria-current=\"page\">Loan Against FD<\/span><\/span><\/div>","protected":false},"excerpt":{"rendered":"<p>A loan against FD lets you borrow money using your fixed deposit as security. You can usually get 75% to 90% of the deposit value. The interest rate is typically just 1% to 2% above your FD rate. Your FD stays intact and keeps earning interest. For many people, it&#8217;s one of the cheapest and&hellip;<\/p>\n","protected":false},"author":7,"featured_media":2020,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[222],"tags":[429,21,428,360,31],"class_list":["post-2019","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-loan-guides-financial-wellness","tag-fixed-deposit","tag-loan-interest-rates-india","tag-loans-against-fd","tag-loans-against-property","tag-personal-loan-eligibility-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Loan Against FD: Interest Rate, Eligibility &amp; How It Works<\/title>\n<meta name=\"description\" content=\"Learn how a loan against FD works, including interest rates, borrowing limits, eligibility, overdraft options and whether it&#039;s better.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.taptaploans.in\/blog\/loan-against-fd\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Loan Against FD: Interest Rate, Eligibility &amp; 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