Loan Against FD to Study Abroad

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  • July 26, 2025
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Loan Against FD to Study Abroad

A loan against FD to study abroad offers a smart, secure way to fund this journey without liquidating your savings. By leveraging fixed deposits as collateral, this financing option offers lower interest rates and flexible terms, making it an attractive choice for covering tuition, living expenses, and other expenses. 

This blog explores how a loan against an FD to study abroad works, its benefits, eligibility criteria, and the steps to apply, empowering you to make informed financial decisions for your international education. Without further ado, let’s get started!

This Blog Includes:
  1. What Is a Loan Against FD to Study Abroad?
  2. Why Choose a Loan Against FD to Study Abroad?
  3. Eligibility Criteria for a Loan Against FD to Study Abroad
  4. Top Banks Offering Loans Against FD to Study Abroad
  5. How to Apply for a Loan Against FD to Study Abroad
  6. Documents Required for a Loan Against FD to Study Abroad
  7. Key Considerations Before Taking a Loan Against FD
  8. FAQs

What Is a Loan Against FD to Study Abroad?

A loan against FD to study abroad is a secured loan where you pledge your fixed deposit as collateral to borrow funds for overseas education. Unlike traditional education loans, this option typically offers lower interest rates since the fixed deposit reduces the lender’s risk. 

The loan to study abroad against FD covers expenses such as tuition fees, accommodation, travel, and other study-related costs, allowing you to pursue your academic goals without compromising your FD or disrupting your savings plan. Here are the key features:

  • Borrow up to 90% of the FD value, depending on the bank.
  • Retain your FD, which continues to earn interest during the loan tenure.
  • Lower interest rates compared to unsecured education loans, often 1-2% above the FD rate.
  • Flexible repayment options, with some banks offering repayment after course completion.

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Why Choose a Loan Against FD to Study Abroad?

Opting for a loan against FD to study abroad provides financial flexibility and security. This loan type minimizes risk for both the borrower and the lender, ensuring competitive rates and favorable terms.

It allows you to maintain your savings while accessing funds for international education, making it a practical choice for managing high study costs. Here are the benefits:

  • Lower Interest Rates: Secured by the FD, these loans often have rates 1-2% higher than the FD’s interest rate, significantly lower than unsecured loans (9-11% vs. 11-16%).
  • No FD Liquidation: Your fixed deposit remains intact, continuing to earn interest.
  • Quick Approval: Minimal documentation and faster processing due to the secure nature.
  • Flexible Tenure: Repayment periods can extend up to 7 years, aligning with study and moratorium periods.
  • No Prepayment Penalties: Many banks allow early repayment without extra charges.

Eligibility Criteria for a Loan Against FD to Study Abroad

Securing a loan against FD to study abroad requires meeting specific eligibility criteria set by banks. These criteria ensure that the borrower can manage repayments while pursuing their education. 

Understanding these requirements helps streamline the application process and increases approval chances. Here are the eligibility requirements:

  • Must be an Indian citizen with a fixed deposit in a recognized bank.
  • Secured admission to top universities & colleges or recognized international institutions.
  • Minimum FD amount, typically INR 25,000, though this varies by bank.
  • Co-applicant (parent, guardian, or spouse) may be required for some banks.
  • Valid KYC documents and proof of admission (offer letter, fee structure).

Top Banks Offering Loans Against FD to Study Abroad

Several leading banks in India provide loans against FD to study abroad, each with competitive terms. Comparing these options helps you choose the best fit for your financial needs. The table below highlights key details from top banks offering this loan type.

BankLoan AmountInterest Rate
HDFC BankUp to 90% of the FD valueFD rate + 1-2%
SBIUp to 90% of the FD valueFD rate + 1-2%
ICICI BankUp to 80-90% of the FD valueFD rate + 1-2%
Axis BankUp to 85% of the FD valueFD rate + 1-2%

Note: Terms may vary based on the applicant’s profile and bank policies. Always verify with the bank for the latest details.

How to Apply for a Loan Against FD to Study Abroad

Applying for a loan against FD to study abroad is straightforward, thanks to streamlined processes offered by most banks. Following a step-by-step approach ensures a hassle-free application and quick disbursal of funds. Here are the application steps:

  • Step 1: Verify FD Details: Confirm your fixed deposit is active and meets the bank’s minimum amount requirement.
  • Step 2: Gather Documents: Prepare KYC documents, FD certificate, admission letter, and fee structure from the international institute.
  • Step 3: Submit Application: Apply online via the bank’s net banking portal or visit a branch with the completed loan application form.
  • Step 4: Loan Processing: The bank evaluates the FD and verifies documents, typically approving the education loan process within 2-7 days.
  • Step 5: Fund Disbursal: Funds are disbursed directly to the institute or your account, as per the loan terms.

Documents Required for a Loan Against FD to Study Abroad

Having the right documents ready simplifies the process of securing a loan against FD to study abroad. Banks require specific paperwork to verify your identity, FD details, and educational plans. Here are the required documents:

  • Duly filled and signed loan application form.
  • Fixed deposit certificate or receipt.
  • KYC documents: Aadhaar, PAN, passport, or voter ID.
  • An admission letter from the foreign university or institute.
  • Fee structure and course details from the institution.
  • Passport-sized photographs and the co-applicant’s KYC (if required).

Also Read:

Key Considerations Before Taking a Loan Against FD

Before committing to a loan against an FD to study abroad, evaluate key factors to ensure it aligns with your financial goals. These considerations help you avoid potential pitfalls and make the most of this financing option. Factors to Consider:

  • FD Tenure vs. Loan Tenure: Ensure the FD tenure aligns with or exceeds the loan repayment period to avoid complications.
  • Interest Rate Impact: The loan interest rate is typically higher than the FD’s earning rate, slightly reducing overall returns.
  • Repayment Capacity: Plan repayments considering future earnings post-education, as defaulting could lead to FD seizure.
  • Bank Terms: Compare processing fees, disbursal speed, and additional charges across banks.
  • Currency Fluctuations: Account for exchange rate risks when paying international tuition fees.

A loan against FD to study abroad offers a secure, affordable way to fund your international education without sacrificing your savings. With lower interest rates, quick approvals, and flexible repayment terms, it’s an ideal choice for managing high study costs. By understanding eligibility, comparing top banks, and preparing the right documents, you can unlock global academic opportunities with confidence. Evaluate your options carefully, plan repayments wisely, and take the first step toward your dream education abroad.

FAQs

Can I take an education loan against FD?

Yes, you can take an education loan against a fixed deposit to study abroad. By pledging your FD as collateral, banks offer loans up to 90% of the FD value at lower interest rates (1-2% above FD rate), ensuring your savings remain intact while funding tuition, accommodation, and other expenses.

Can I get a 100% loan to study abroad?

No, a 100% loan against FD to study abroad is rare. Most banks offer up to 80-90% of the FD value to mitigate risk. For 100% funding, consider unsecured education loans or scholarships, though they may have higher interest rates or stricter eligibility criteria. Always check specific bank policies.

Does a bank give a loan to study abroad?

Yes, banks like HDFC, SBI, ICICI, and Axis provide loans to study abroad, including loans against FD and unsecured education loans. These cover tuition, living expenses, and travel, with amounts up to INR 1.5 crore or 90% of FD value, subject to eligibility and documentation like admission letters.

Is it wise to take a loan against FD?

Taking a loan against FD to study abroad is wise due to lower interest rates (FD rate + 1-2%), quick approvals, and no FD liquidation. However, ensure repayment aligns with future earnings to avoid FD seizure. Compare bank terms and consider currency fluctuations for international payments to make an informed decision.

Evaluate all study abroad options with Leverage Edu. Stay tuned with Leverage Live classes and realise your dream of studying in your dream country.

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With over six years of dedicated experience as a content writer in the EdTech industry, I bring a wealth of knowledge and expertise to the field. I have had the privilege of collaborating with various esteemed organizations, consistently contributing to the advancement of learning. I am committed to continuously enhancing my knowledge and sharing insights on topics within my areas of expertise.

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