Fixed deposit loans are a type of loan that is secured against a fixed deposit account held with a bank or financial institution. This type of loan is relatively easy to obtain, as it is secured against the deposit account, acts as collateral for the loan. In this article, we will cover the ins and outs of fixed deposit loans, and provide a beginner’s guide to this type of loan.
- Understand what a fixed deposit account is. A fixed deposit account is a type of savings account that is held with a bank or financial institution. Account allows you to deposit a lump sum of money for a fixed period of time, typically ranging from a few months to a few years. Money in the account earns interest at a fixed rate and which is typically higher than that offered by a regular savings account.
- With a fixed deposit loan, use the funds in your fixed deposit account as collateral to secure a loan. Loan amount that you obtain is typically a percentage of the value of your fixed deposit account, with the percentage varying depending on the bank or financial institution. The interest rate on fixed deposit loans is typically lower than that of other types of loans, as the loan is secured against the fixed deposit account.
- One of the benefits of fixed deposit rates Singapore is that they are relatively easy to obtain. Secured against the fixed deposit account, there is no need for a credit check or other forms of documentation that are typically required for other types of loans. This makes fixed deposit loans a good option for individuals who may have a poor credit history or who may not have a regular source of income.
- Loans are that they offer lower interest rates than other types of loans. This is because the loan is secured against the fixed deposit account, which provides collateral for the loan. Banks or financial institutions take on less risk and which allows them to offer a lower interest rate. This makes fixed deposit loans a good option for individuals who may be looking to borrow money at a lower interest rate.
- When applying for a fixed deposit loan, it is important to keep in mind that the loan amount will typically be a percentage of the value of your fixed deposit account. This means that the loan amount may be limited, depending on the amount of money that you have in your fixed deposit account. Additionally, the terms and conditions of the loan will vary depending on the bank or financial institution, so it is important to read the fine print carefully before signing on the dotted line.