How to make use of Fixed Deposits to Get a Car Loan

The high-quality old FD or Fixed Deposit has long been the go-to the investment alternative of options for people since decades. Even as newer asset options emerged with the opening up of the economy, the FD detained on to a place it might call its own. With the increase in disposable income and aspirations of people, India soon embarked on an automotive revolution. Buoyed by supportive car finance schemes, many people began to live their automotive dream.rnToday, there is a thorough market of new cars waiting to be driven out of the showrooms. As buyers gather to dealers, looking for the most excellent deal out there, the humble car loan against fixed deposit is starting to rise in popularity once again. Let’s take a closer look at them from behind the trench lines:rnOne of the crucial things to bear in mind is that the world of car loan treats borrowings against fixed deposits as an overdraft facility. It is not a loan in the technical terms per se. This is because, the money in the fixed deposit, belongs to the borrower. He/she is just using it as collateral with the lender, to cover the sum being borrowed.rnWhat makes the car loan against fixed deposit so good-looking for car buyers is that the interest rates are usually two-three percent lower in contrast to usual auto loans. Thus, not only is the money there to be borrowed, it is also available at a lower interest rate than regular products.rnLenders usually do not extend the borrowing to cover the entire fixed deposit amount. It is usually capped at the 80-85% mark.rnLenders usually don’t levy any processing/miscellaneous fees on car loan availed under such conditions. Moreover, there are no add-on charges either, should one choose to pre-pay the loan after a definite period. Most importantly although, in the case of regular car loans, it is the lender who holds the ownership rights over the vehicle. Should the borrower default, the lender is well inside their right to take back the car in order to make progress the loan. In the case of fixed-deposit based car finance, the borrower continues to stay the sole owner of the car. He/she just needs to repay the borrowed amount or it gets deducted from the fixed deposit against which the funds were drawn.