If you suddenly need 5 lakh rupees and the option is to withdraw ₹5 lakh from EPF or take a personal loan, then in such a situation it is always necessary to make a decision after thinking carefully. ,Both have their own advantages and disadvantages and one wrong decision of yours can cause a loss of lakhs.

Everyone can need money in an emergency and at any time. Whenever there is a need of 5 lakh rupees, it is not understood from where to take the money. In such a situation, people often withdraw money from PF. At the same time, some people take personal loan. But have you ever thought that in case of sudden need of money, which one should be resorted to, PF or personal loan.

Yes, if there is a sudden need of 5 lakh rupees, then it is necessary to take a careful decision before choosing either EPF or personal loan. Actually, the interest rate, advantages, disadvantages of both are different. A decision taken by you in haste can cause a loss of lakhs.

If you need ₹5 lakh, then there are two major options - withdrawing money from PF or taking a personal loan. Both these options have their advantages and disadvantages, so let's understand in simple language.

The 8.25% annual interest rate on Provident Fund (PF) is tax-free and compounded, which makes it a strong long-term savings option. So if you withdraw ₹5 lakh from PF, then you may have to bear the loss of interest of about ₹2.45 lakh in the next 5 years. That is, the amount of ₹5 lakh can become ₹7.45 lakh in 5 years. However, you will not have to bear the burden of EMI or loan by withdrawing money from PF.

On the other hand, if you need ₹5 lakh and take a personal loan for this, then its average interest rate can be up to 13% per annum. If you repay this loan in 5 years, your monthly EMI can be around ₹11,400. Overall, you will have to pay around ₹6.84 lakh instead of ₹5 lakh, which means ₹1.84 lakh more than the principal amount will go out of your pocket in the form of interest.

If you need money immediately, breaking PF or taking a personal loan—which step is wise? Always take this decision carefully, if you withdraw PF, you will lose ₹2.45 lakh return in future and this weakens your retirement savings, but there is no hassle of EMI. On the other hand, there is an extra expense of ₹1.84 lakh on personal loan, but if you do not have the ability to pay EMI, then PF is safe.

If the expense is not necessary or can be postponed, then avoid personal loan and withdraw PF partially or wait. Also, if PF is your only savings and it is not possible to postpone your expenses, then partial PF withdrawal is better than a personal loan. Apart from this, if you have a strong capacity to pay EMI, and you want to save PF for retirement, then taking a personal loan can be wise. (Note- Only information is given here, it will be your decision which help you will take when you need money)