If you need money, take a loan against FD: You will easily get a loan at low interest rate, you will not even have to break the FD; understand the complete math

It is often seen that when people suddenly need money, they break their fixed deposit (FD). But by doing this you may have to suffer a loss. Because if you break the FD before maturity, you will not only get less interest but you will also have to pay a penalty.

Here we are telling you about the losses incurred by breaking FD before maturity and the loan facility available on FD.

How much less interest will you get if you break FD before time? If you are breaking the FD before time, then you do not get the interest at the rate at which you have made the FD. According to the information given on the SBI website, if you break the FD before time, then you will get up to 1% less interest than the interest you were supposed to get on the FD.

For example, suppose you made an FD of Rs 1 lakh for 1 year at the rate of 6%, but you break it after 6 months, the bank will give you interest at the rate of 5% on your money, not 6%. Apart from this, you will also have to pay a penalty on this.

How much penalty will have to be paid? According to the rules of the country’s largest bank SBI, if a person makes an FD of up to Rs 5 lakh, then he will have to pay a penalty of 0.50% if the FD is broken before maturity. Similarly, a penalty of 1% will have to be paid on FDs of more than Rs 5 lakh and less than one crore if the FD is broken before time. At the same time, after deducting up to 1% from the interest received on the FD (as mentioned above), you are given your money after collecting a penalty according to the amount of the FD.

You can take loan against FD Under this, you can take a loan up to 90% of the value of FD. Suppose the value of your FD is Rs 1 lakh, then you can get a loan of Rs 90 thousand. If you take a loan on FD, then you will have to pay 1-2% more interest than the interest received on fixed deposit. For example, suppose you are getting 4% interest on your FD, then you can get a loan at an interest rate of 5 to 6%.

What will happen if the loan is not repaid? If a person takes a loan against FD and is unable to repay it, then when your FD matures, the bank will deduct the outstanding loan amount from it. In such a situation, whatever money is left of the FD after this, you will get it.