If you suddenly need money in times of trouble, then you do not need to break any of your policies, you can easily fulfill your need by taking a PPF loan. This loan is much cheaper than a personal loan.
If you invest in Public Provident Fund (PPF), then you not only get better interest on it, but you also get many other benefits. One of these is loan facility. Loan against PPF is much cheaper than personal loan. That is, if you suddenly need money in times of trouble, then you do not need to break any of your policies, you can easily fulfill your need by taking a PPF loan. However, there are some rules regarding PPF loan, which are important to know. Know here the special things related to PPF loan.
Much cheaper than personal loan
The good thing about PPF loan is that it is available at very affordable rates and for this you do not even need to mortgage anything. The reason for this is that this loan is given to you on the basis of the amount deposited in your PPF account. Talking about loan interest rates, as per the rules, the interest on loan on PPF account is one percent more than the interest on PPF account. That means, at present, if you are getting interest at the rate of 7.1 percent on your PPF account, then the interest on the loan will be at the rate of 8.1 percent. Whereas the interest rate of personal loan can range from 10.50% to 17 or 18%.
Loan has to be repaid in three years
After taking PPF loan, you are given a good amount of time to repay it. You can repay this loan amount in three years i.e. 36 installments. You can decide yourself in how many installments you have to repay the loan. First of all you have to pay the principal amount of the loan. Later, the interest is calculated according to the payment period. Apart from this, if you get a lump sum amount from somewhere in between, then you can repay it by paying the amount in one go. But if you are not able to repay the loan within 36 months, then as a penalty you will have to repay the loan at 6 percent more interest rate instead of 1 percent more than the interest available on PPF.
Loan Terms
- PPF account should be at least one financial year old, only then you can apply for the loan.
- After completion of five years of PPF account, loan facility is not available on it because after this you can withdraw the amount partially.
- You can take only 25% of the amount available in the PPF account as loan.
- You can take loan against PPF account only once. Even if you have repaid the earlier loan, you still do not get the facility of re-loan on this account.
How to apply for loan
For this, you will have to go to the branch of the bank in which the PPF account is opened, fill the form and apply for the loan. Form D is used for this in SBI. Along with this, the loan amount and the period for repayment will have to be written in an application. If you have taken any loan before this, then you will have to mention that also. After this the PPF passbook will have to be submitted. After the entire process, the loan is approved within about a week.
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