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Why Apply for a Loan Against RD?

Life is unpredictable. Everything will work according to plan, and suddenly, things take a turn for the worse. You should be prepared for this unpredictability. Otherwise, you find yourself in a vulnerable position. Investments are an effective way to be financially prepared for the unpredictability of life. It builds a significant financial corpus that you can rely on to get through troubled times.

You have several investment options to choose from. However, a Recurring Deposit remains one of the most preferred options. This is because RD allows you to build a financial corpus by making regular investments. This ensures you need not compromise on your present financial situation and can work towards your future investment goals. The benefits of RDs do not stop at wealth creation. It also opens doors to credit opportunities.

You can apply for a Loan against RD. Here, you pledge your RD to secure the Loan amount. Here are the benefits of a Loan against RD:

Protect your investments

One of the biggest advantages of applying for a Loan against RD is that it helps you protect your investment. Suppose an unplanned significant financial requirement comes up. You need the money to meet the emergency. Given this, you consider prematurely closing your RDs.  Doing so requires you to pay a penalty and forfeit interest earnings. This indicates a big financial loss.

Taking a Loan against an RD allows you to secure your investments, ensuring your future financial plan is unaffected. If you are wondering how much corpus you can build by keeping the investment untouched, consider using a Recurring Deposit Calculator. It provides an estimate of the RD maturity amount within minutes. The calculator is readily available on every leading banking website.

Borrow a considerable amount

Banks may approve Loan amounts equivalent to 80-90% of the deposit amount. This translates to a considerable Loan amount that should be enough to meet your financial requirements. Note that besides considering the deposit amount, the bank checks your overall eligibility to approve your Loan request. Hence, ensure you maintain a good repayment capacity and an excellent credit score to enjoy quick Loan approval and get a fair deal.

Competitive interest rates

The applicable interest rate makes an enormous difference to your Loan repayment. Since a Loan against a Recurring Deposit is a Secured Loan, you can get it at a competitive interest rate. This makes your Loan repayment affordable. Remember, the bank considers your eligibility to extend a suitable interest rate. As mentioned, maintain a good repayment capacity and excellent credit score to get a competitive Loan interest rate.

This makes your repayment affordable, enabling you to take care of it without struggling or defaulting.

Written by Shreya Eppili

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