No matter how much you try to keep you and your family safe, no one can tell if an emergency is heading your way or whether your life turns down unexpectedly. The only thing that remains within your control then is how prepared you are and what you can do to handle the situation. One such solution which can easily combat at least half of your problems is proper liquidity management.
Wealth creation is crucial when you’re starting a family or thinking about your future after retirement. Your salary might be sufficient to stabilize you for now, but savings and long term investments are two things that will support you to a great extent in your adversity as well as old age.
While preparing for such circumstances, people often get confused about whether they should take a loan against PNB housing finance FD or a personal loan. That’s why we bring you the most significant differences between them from which you can easily decide which one is better.
- Rate of Interest of Loan
For personal loans, the rate of interest starts at 14% and can even go up to 30% per annum. On the other hand, the rate of interest on loan against FD is usually 2% to 3% higher than the fixed deposit rate of interest. PNB housing finance FD rates are quite reasonable, and hence, their interest rate on loans against FD is also affordable.
- Limit of the Loan Amount
Although various banks differ in the limit they set to the loan amount taken against FD, usually, it is up to 90% of your FD’s amount. But in personal loans, the amount majorly depends upon the borrower’s profile, history, credit score, reliability, monthly salary, monthly expenditure, etc.
- Tenure of the Loan
It is also essential to look into the period for which that loan is available to you. For personal loans, the tenure is very limited- up to five to six years only. But when you take a loan against PNB housing finance FD, the tenure stretches until the maturity period of the FD itself. So, if your FD matures after 20 years from today, then you can avail the loan until the coming 20 years!
The process of applying for a personal loan and getting verified is lengthier than the loan against FD. For a personal loan, you need to submit required documents, identity proofs and wait for verification. But nothing much is asked in case of loan against Fixed Deposit.
- Loan Processing Fees
Banks usually charge a processing fee for personal loans, which ranges between 0.5% to 2%. But to get a loan against FD, you don’t have to pay a processing fee.
Go through PNB housing finance FD rates if you want to take a loan without documentation and processing fee.
After comparing personal loans with loans against FD based on the rate of interest, limit of the loan amount, loan tenure, documentation and processing fees, it has become evident that loans against FD are more affordable and better than personal loans. But in case you need a loan right now and don’t have an FD, a personal loan is an ideal choice.