Loan Against FD Calculator
Loan Against FD Calculator
How much you can borrow against a fixed deposit, what the loan costs, and whether that is cheaper than breaking the FD and paying the premature-withdrawal penalty.
Loan against FD or break it
An FD of $5,00,000 at 7% that has run 12 months (1-year rate 6.5%, penalty 0.5%); $2,00,000 needed for 6 months; overdraft at 1% over the FD rate
Borrowing against an FD against breaking it
Cost of breaking = D × [g(F, k) − g(R, k)] + interest A would have earned in the FD
g(x, k) = (1 + x ÷ 400)⌊k ÷ 3⌋ × (1 + x × (k mod 3) ÷ 1200)
- A, t
- the amount you need and the months you need it for
- F, m
- the FD rate and the bank’s margin above it
- D, k
- the deposit and the months it has run
- R
- the rate paid on premature withdrawal: the lower of the rate for the period run and the FD rate, less the penalty. With tax, every FD rate is × (1 − tax rate).
- interest given up
- A × F × t ÷ 1200 on an overdraft; on a term loan the FD rate on what is still owed each month, which is the loan interest × F ÷ (F + m)
Worked example
An FD of $5,00,000 at 7% that has run 12 months (1-year rate 6.5%, penalty 0.5%); $2,00,000 needed for 6 months; overdraft at 1% over the FD rate
Loan limit = 90% × 5,00,000 = $4,50,000, enough
Overdraft interest = 2,00,000 × 8% × 6 ÷ 12 = $8,000
Breaking: the rate becomes min(6.5, 7) − 0.5 = 6%; interest on 5,00,000 for a year falls from 35,930 to 30,682: $5,248 lost
And 2,00,000 stops earning 7% for 6 months: $7,000; breaking costs $12,248
Borrowing saves 12,248 − 8,000 = $4,248
The example for different lengths of time
| Money needed for | Overdraft interest | Cost of breaking | Saving by borrowing |
|---|---|---|---|
| 1 month | $1,333 | $6,414 | $5,081 |
| 3 months | $4,000 | $8,748 | $4,748 |
| 6 months | $8,000 | $12,248 | $4,248 |
| 12 months | $16,000 | $19,248 | $3,248 |
| 24 months | $32,000 | $33,248 | $1,248 |
Loan against an FD or break it: which costs less
Banks lend against their own fixed deposits, usually as an overdraft or a demand loan. SBI lends up to 90% of the deposit at 1% above the deposit rate; HDFC Bank’s overdraft against an FD is reported at up to 90% and 2% above the FD rate, with interest only on the amount you use. The deposit stays in place and keeps earning, so the real cost of the loan is only the margin over the FD rate.
Breaking the FD looks free, but it is not. Banks pay a premature withdrawal at the rate for the period the deposit actually ran, if that is lower than the contracted rate, and take a penalty off it: SBI’s is 0.50% on retail deposits up to ₹5 lakh and 1% above that. That cut applies to all the interest the deposit has already earned. And the money you take out stops earning for as long as you need it.
So the answer turns on time. In the example, borrowing for six months saves $4,248. For a short need, the loan nearly always wins, because the penalty is a one-off hit on the whole deposit’s interest while the loan’s margin is small. For a long need the margin keeps adding up, and past 31 months breaking becomes cheaper in the example. Tax tilts it further towards breaking: FD interest is taxable, so the interest you give up costs you less after tax, while interest on a personal loan does not reduce your tax. At a 30% tax rate the example’s saving falls to $521.
A term loan with EMIs costs less interest than an overdraft kept for the whole period, because you repay as you go; here it would be $4,693. Some banks also let you withdraw only part of an FD, with the penalty on that part: enter that part as the FD amount. Check your bank’s actual rates, penalty and any processing fee before deciding. See what the deposit earns with the FD calculator, and compare a gold loan calculator or a personal loan EMI calculator if you have no FD. This is arithmetic on the figures you enter, not financial advice.
Frequently asked questions
How much loan can I get against an FD?
Commonly up to 90% of the deposit: SBI and HDFC Bank both lend up to 90%. On $5,00,000 that is $4,50,000.
What is the interest rate on a loan against an FD?
Usually the FD’s own rate plus a margin: SBI charges 1% above the deposit rate and HDFC Bank’s overdraft is reported at 2% above.
Is it better to take a loan against an FD or break it?
For a few months, the loan usually costs less, because breaking cuts the interest the whole deposit has earned. In the example borrowing for 6 months saves $4,248. For long periods breaking can be cheaper.
Does the FD keep earning interest while I have a loan against it?
Yes. The deposit stays in place at its rate until maturity; the bank simply holds it as security. If the loan is not repaid, the bank can recover it from the deposit.
Related calculators
References
- State Bank of India. Loan against Time Deposit (web page, consulted 22 September 2026): loan up to 90% of the value of the time deposit (10% margin); interest 1% above the relative time deposit rate; demand loan or overdraft; tenure up to the deposit’s remaining maturity. https://sbi.bank.in
- State Bank of India. Domestic Retail Term Deposits — Revision in Penalty on Premature Withdrawals (effective 1 April 2017): penalty 0.50% for deposits up to Rs 5 lakh and 1% above Rs 5 lakh and below Rs 1 crore; interest at 0.50% or 1% below the rate applicable for the period the deposit remained with the bank, or below the contracted rate, whichever is lower.
- HDFC Bank Overdraft against Fixed Deposit, as reported by Paisabazaar (page updated 28 November 2025): up to 90% of the FD amount, interest 2% above the applicable FD rate, charged only on the amount withdrawn for the period used. HDFC Bank’s own product page did not render when consulted.
- Reserve Bank of India. Master Direction — Reserve Bank of India (Interest Rate on Deposits) Directions, 2016 (as updated): premature withdrawal is paid at the rate for the period the deposit actually ran; banks set and disclose their own penalties.
- Brealey RA, Myers SC, Allen F. Principles of Corporate Finance. McGraw-Hill. The present value of an annuity, from which the level-payment loan formula, its balance after any number of payments and its inverse for the number of payments follow.