Loan against Deposit

 A loan against deposit is one of the most reliable and loyal ways to obtain financing, in which the borrower uses his term bank deposit as collateral. This form of lending is suitable for those who have free funds on deposit, but at the same time need liquidity without breaking the deposit agreement.

The essence is that the bank issues a loan for an amount that is usually from 80% to 95% of the deposit value, with a lower interest rate than with a regular consumer loan. The reason for this is the minimal risk for the bank: in case of default, it has the right to withhold funds from the deposit. At the same time, the deposit itself continues to "work" - interest is accrued on it, which partially or fully compensates for the cost of the loan.

This type of loan is often used as a tool for financial flexibility: for example, for short-term investments, replenishment of working capital or covering a temporary cash gap. It is especially popular among entrepreneurs who do not want to lose the profitability of a long-term deposit, but need money "here and now".

The financial advantage is obvious - low interest rate, simple registration, no need for additional checks or guarantors. However, it is important to consider: if you do not repay the loan within the specified period, the bank has the full right to terminate the deposit and compensate for the debt at the expense of your deposit.