Investors often look for immediate solutions that can mitigate their financial crunches. To assist investors during such situations, there are are some prominent loan solutions that come to their aid. They are:

  • Unsecured loans through personal loans

  • Secured loans through a loan against FD

  • Liquefying deposits

Among the above options, liquifying deposits has been considered as an unwise move as it negates the whole purpose of saving and investing. The hefty premature withdrawal penalties often leave investors at a loss rather than gain.

So, which is the best option between unsecured and secured loan solutions?

The following guide aims to provide a solution to this question. It is devised to draw a comparison between the interest rates and benefits of the options. Thus, aiding investors arrive at an informed decision.

Fixed deposits (FD) and Loan against FD

Fixed deposits are deposits made with financial platforms over a stipulated period for fixed interest. Although the current FD interest rates are 4% to 8%, specific NBFC platforms such as PNB Housing Finance offer interest rates up to 8.40%. Besides the low risk and guaranteed returns of this tool, the real benefit comes through a loan against FD provision. 

Benefits of Availing Loan Against FD 

  • High Loan Amount: Up to 70% to 90% of the deposit amount can be availed as a loan. At PNB Housing Finance, investors are eligible to avail a loan of up to 75% of the deposit amount

  • Hassle-free: Since the fixed deposit serves as the collateral or security, investors can steer away from strict documentation necessities.

  • Low-interest rates: The interest rates charged on loan against FD is generally only 1%- 2% higher than interest rates that investors accrue on their fixed deposits. Also, an investor is charged with an interest rate based on the deposit amount availed as a loan and not the entire fixed deposit.

  • Flexible repayment: There are no stringent rules or dates for repayment and is highly adaptable.

  • Low processing fee: Availing loan against FD relieves investors from hefty processing charges. Premium customers are also sometimes entitled to processing fee waiver based on the lender.

Personal loans vs Loan against FD


Personal Loan

Loan against FD

Loan amount

Upto Rs. 35 lakhs, generally based on the income of the investor or credit score

70% to 90% of the deposit amount

Loan tenure

1 to 5 years

Upto FD maturity period

Key Documents required

  • Address proof

  • Income proof

  • Identity proof

  • Certificates of degree or license


Interest rate

14% to 30% per annum

2% to 5% higher than return on FD

Processing and pre-closure fee

2% of the loan amount onwards


Final Thoughts

Choosing between personal loans and loans against FD is entirely a personal choice and dependent on the financial needs of the customer. However, if the investor has a sufficient amount in fixed deposits, a loan against FD would be a suitable option.