When you talk about investment, a fixed deposit is the first thing that strikes your mind. The bank’s fixed deposit is known to everyone, and most of us have our fixed deposit accounts in different banks. You can get more returns on your fixed deposits when you opt for a company fixed deposit. A company fixed deposit tend to offer 1% to 3% higher interest rates than being offered by banks for the same time periods.
What is a company fixed deposit?
When you have a company fixed deposit or a company term deposit of a fixed deposit which is issued by the companies such as finance companies, housing finance company and by other NBFCs. A company fixed deposits are one of the best ways by which you can grow your money. Fixed deposits are generally rated for their credibility by the rating agencies such as ICRA, CARE, CRISIL, and many more.
Things you should know before investing in a company interest rates:
- Higher Interest Rates: The interest rate which companies provide is comparatively much higher than what is given by the banks. A corporate fixed deposit is the one that pays even more than 9.00% interest per annum.
- Periodic Interest Payment Options: The company fixed deposit provides a number of interest pay-out options. Depending on your requirements, you can choose it monthly, quarterly, and yearly interest pay-out interest options.
- Credit Ratings: All of the company fixed deposit is rated by autonomous agencies like the ICRA and CRISIL. It offers customers a chance to go for a well-rated fixed deposit.
- Unattractive Post-Tax Returns: A company fixed deposit is so tempting, and it is because of the high interest rates. But if you fall in the 30% tax bracket, the interest earned on your company fixed deposit will be subjected to tax. However, you can very well enjoy no tax benefits.
- Risks: When it comes to bank fixed deposits, it comes with a certain guarantee and deposit insurance. But a company fixed deposit is somewhat risky. You have to be aware of the risk factor that is involved before making an investment in any such fixed deposit scheme. However, the risks which are involved can be easily minimised to an extent by going for a well-rated company scheme.
- Penalties for Pre-Mature Withdrawal: A pre-mature withdrawal can lead you to a cash crunch for the company if it is not going through a financially good phase. In order to avoid this situation, most of the companies charge a penalty if you withdraw your money before the maturity period.
- Check the company’s track record: Before you decide to invest and apply to a particular company, you must do the proper research for choosing the company. You should check the track record of the company and find out its financial status.
- Risks Involved: When it comes to corporate fixed deposits, it has a default risk that is involved. And some of them are the pre-mature withdrawals of the deposited amount. A pre-mature withdrawal can sometimes lead to a cash crunch in the company. The second risk involved is that if the company is not doing well and you have invested in the wrong company, you will not receive any returns even if the maturity period ends. However, before making any such decisions, ensure to choose your investment company.
- You are allowed to have a nominee: When you decide to opt for a company fixed deposit, you can have a nominee. It is beneficial for the investor as life is unpredictable, and god forbid what will take place if the investor is no more when your fixed deposit matures. However, the money will be given to the nominee.
- Understand the outlines: When it comes to opting for a company fixed deposit, you will be given an application form to fill in and sign. Before signing, you will have to read the form carefully and also understand to each and every term and condition involved. It will reduce your confusion and also make you confident. However, you will be acknowledging each and everything related to your fixed deposit.
In a company fixed deposit, it is a good option in which you can invest. By doing this, it will give you more returns than a standard fixed deposit. It will help you grow your money in a better manner. The offer which is attempting, but you should not forget to do a proper research before making any decisions. It is an excellent option for investments.
Conclusion: STFC is well known as India’s largest and most trusted NBFC in the country. You can get a higher and attractive return on investments with the highest security. Shriram Transport Finance Company has a wide availability of decentralised branches and rural centres to provide customised services.
