Many times, there is a sudden need for money, and it is difficult to understand whether to spend your savings or take a loan. But in such a situation, it would not be wise to end a long-term investment. If you do this, your financial future can be in danger. It would be better to handle this problem in some other way. Usually, people take a personal loan in such cases. But if you do not need a very large amount as a loan, then why loosen your pocket by getting into the hassle of a personal loan? If you are a PPF investor, then you can take advantage of the loan facility available on this scheme. It will be much cheaper than a personal loan, and there will be no hassle of processing fees, etc., associated with it. Know about the terms related to this loan here.

First, understand what PPF is.

Public Provident Fund, i.e., PPF, is a government scheme that is designed according to long-term goals and tax saving. This scheme matures in 15 years. If you want, you can also extend it further. In this, you can deposit a maximum of Rs 1.5 lakh in a financial year. Currently, 7.1 percent interest is being given on it.

The account should be 1 year old for the loan.

A loan facility on PPF is available only to those whose account is at least 1 year old. Meaning, if you have opened your account in the financial year 2024-25 (ie, between 1 April 2024 and 31 March 2025), then you can apply for a loan from the financial year 2025-26 (ie, after 1 April 2025). At the same time, you can avail the loan facility only from the end of the year in which the account is opened till the completion of five years, because after this, you get the facility of partial withdrawal from the account.

How much loan can you take?

You can take a loan of up to 25% of the amount that was in your account at the end of the financial year just two years before the year in which you are applying for the loan. Meaning, if you are taking a loan in the financial year 2025-26, then you can get a loan of up to 25% of the balance in your account on 31 March 2024.

Cheaper than a personal loan

The interest charged on a PPF loan is much cheaper than that on a personal loan. 11 to 24 percent interest can be charged on a personal loan, but the interest on a PPF loan is only 1% more than the interest rates of a PPF account. That is, if you are currently taking 7.1% interest on a PPF account, then you will have to pay 8.1% interest on taking a loan.

These are also the benefits.
The benefit of this loan is that you do not have to mortgage gold or property as security because this loan is given to you based on the amount deposited in the PPF account. Apart from this, there is no hassle of processing fees, etc.

It is necessary to repay the loan within 36 months.
The loan taken on PPF is required to be repaid within 36 months. You can repay it in two ways: first, you repay it in a lump sum, and the second way is to repay it in installments. If you are unable to repay the loan within 36 months, then as a penalty, you will have to repay the loan at an interest rate 6 percent higher than the interest received on PPF. This 6% interest will be added from the date on which you received the loan money.

Take out a loan once a financial year
You can take a loan only once in a financial year. You cannot get a second loan until you repay your first loan completely.

How to apply

To avail the loan facility on PPF, you can apply for the loan by visiting the branch of the bank or post office in which the PPF account is opened.

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