Generally, people whenever they get into any financial needs, they prefer to go with their saving amount instead of taking a loan. But, in this case, you’re making your future in danger by breaking the fix deposit amounts or taking from their PF savings. If you have the capability to pay the loan, then why to disturb your savings amount. According to your requirement, you can opt for different loans available in the market provided you need to be responsible for paying it off.
In the market, different options are available for fulfilling your financial needs. Loan against PPF is also one of the loans where you can take the loan against your saving amount which has some rules for opting those loans. The personal loan you can take for any purpose just you need to fulfill the eligibility criteria for the loan amount you’re looking for. A personal loan has its own benefits to the candidates, who are in urgent need of finance to fulfill their sudden financial crunch.
What is the best option for you to opt loan against PPF or personal loan?
You can choose from these two options better when you understand the different types of scenarios comes into picture when you go for this type of loans. Consider some of the main factors which we look at when you go for a loan:
The loan tenure for a loan against the PPF account is fixed for 3 years and in case, if a candidate fails to pay that loan amount, the interest rate will get raised by 4% from the current interest rates. While in case of a personal loan, the loan tenure is decided by both the lender and borrower according to tot he flexibility of repayment by the borrower. In this case, the interest rates will increase if you opt for a longer tenure. The personal loan provides flexibility of repayment based on one’s ability.
In case of a personal loan, the loan amount depends on borrower credit reports, financial ability, eligibility criteria. While in loan against PPF, the borrower can get the loan amount 25% of the saving amount of PPF account of the year prior to the year when the borrower is applying for. Consider, for example, if you’re applying for a loan in the year 2017-2018 then you are eligible to get amount 25% of PPF account of the year 2015-2016.
Limitation of borrowing in a year
There are no limitations in taking a personal loan, as long as the loan is paid on time and lender is ready to pay you the loan. You just need to maintain your credit report proper for taking a loan at low-interest rates. In case of loan against PPF, you can avail loan only once in a year the second loan you can’t get in same year even the loan amount gets paid off the previous loan.
In case of loan against PPF the interest rate is 2% higher than the interest on their PPF saving account they are getting and you must cover up this loan within three years otherwise they need to pay 6% higher than the interest rates on PPF account. Which is fewer interest rates, which you pay in case of a personal loan. In case of a Personal loan, it’s negotiable based on the borrower financial and eligibility criteria.
The candidate with good credit score will get low-interest rates. The interest rate varies in between 11.25% -24%, which is higher than PPF interest rates. But, the flexibility the personal loan provides you won’t get in PPF amount. If you’re confident enough to repay the loan, you can take advantage of PPF loan. Also, the interest rat on your PPF account won’t get affected during the period of when you take a loan against PPF balance that’s is the plus point for the borrower.
If you don’t get enough amount from PPF amount go for a personal loan, according to your eligibility, personal loan processing is also fast and you can get the amount in a little span of time compared to PPF loan.