1. What is Loan Against FD Interest?

The interest charged when you take a loan against your fixed deposit (FD) is typically calculated using simple interest. This calculator helps you estimate the total interest you'll pay on such loans.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( P \) — Principal amount (USD)
• \( r \) — Annual interest rate (in decimal form)
• \( t \) — Time period in years

Explanation: The formula calculates the interest charged on the loan amount for the specified duration at the given rate.

3. Importance of Interest Calculation

Details: Understanding the interest cost helps in comparing loan options and making informed financial decisions when borrowing against your FD.

4. Using the Calculator

Tips: Enter the principal amount in USD, annual interest rate in decimal form (e.g., 0.05 for 5%), and time in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is this different from regular loan interest?
A: Loans against FD typically have lower interest rates than unsecured loans since they're secured by your FD.

Q2: What's the typical interest rate for loans against FD?
A: Rates are usually 1-2% above the FD interest rate, varying by bank and credit profile.

Q3: Can I get 100% of my FD amount as loan?
A: Most banks offer 80-90% of FD value as loan, depending on the bank's policies.

Q4: Is there any processing fee for such loans?
A: Some banks charge nominal processing fees (0.5-1% of loan amount) for loans against FD.

Q5: What happens if I don't repay the loan?
A: The bank can liquidate your FD to recover the loan amount and interest.