It's possible. I am not sure for other banks, according to a Public bank officer:

e.g. if you take 40K loan for 4 years tenure, you have to put a pledge FD 40K, so the bank holds this FD for 4 years, you can only opt for a monthly FD interest for this FD currently is 2.95%, you can't opt for 12months FD option which gives you a higher interest rate.

Let say if loan interest is 2.75%, so the merely 0.2% difference is it worth to go with the pledge FD? I am not very sure, anyone who can share his/her view would be appreciated.

FYI, some of the new car loans interest rates ranging from 2.6 to 2.9, so it's lower than FD.

Whereas used car or the new national car, it's always 3.x above, yes, it is higher than FD.

So the catch is if it's slightly lower than the FD rate, eg. 0.2% should it be a wise choice?