Life keeps throwing up uncertainties; this keeps people on their toes to work hard and save for the future. Those who are adept with financial planning, know the significance of
emergency funds that come in handy in times of crisis related to health, home, work, and daily life. Breaking years of fixed deposits or savings can be the last option to manage the shortage of finances. First, try your hand at easy to
apply for personal loans. Short-term loans such as loans against PPF,
travel loans,
home renovation loans,
medical loans, etc. are safe to apply for and can be repaid with affordable EMIs.
Though various
short-term loans are approved for a limited tenure, they differ in some features. Let us then understand how personal loans and loans against PPF differ from each other.
Personal Loan vs. Loan Against PPF – Which One Should You Choose?
| Key Features | Personal Loan | Loan against PPF |
| Definition | Short-term unsecured loan | Short-term unsecured loan |
| Repayment Option | Flexible repayment ranging between a few months – several years | The loan should be repaid within 3 years of sanction |
| Purpose of loan | No restrictions on utilization of funds | No restrictions on utilization of funds |
| Eligibility | Both salaried and self-employed individuals are eligible | All individuals with a PPF account can avail loan based on certain conditions |
| Approval Process | Instant Approval within a few hours | Loan available from 3rd to 6th year of PPF account opening, and approval involves certain procedures. |
| Amount of Loan | Being small cash loans, lending parameters normally range between Rs.50,000 – Rs.3,00,000. However, it differs from lender to lender. | A loan given against a caveat, states that the loan availed cannot exceed 25% of the available amount in the PPF account at the end of the second year, which immediately precedes the year when the loan is applied.
|
| Rate of Interest | Interest ranges between 11% – 35% per annum based on the lender. | Irrespective of the loan sanctioned, interest is charged at a nominal rate of 1%, but the account holder does not get paid any interest on the PPF amount until the loan gets repaid. |
| Penalty | May vary as per individual lenders. | If the loan is not repaid within 3 years, then interest has to be paid at 4%
|
| Number of loans | Can avail of more than one personal loan if you pay regular EMIs and hold a good credit history. | Only one loan is allowed per fiscal year. |
Which One Should You Choose – Personal Loan or PPF?
The choice would depend on whether you require a loan that is available at a low rate of interest but which would take time to get sanctioned like a loan against PPF or a loan that is easily available for a longer period like a personal loan but at a slightly higher rate of interest.
A loan against PPF would not be beneficial if you do not have enough funds in your PPF account as the loan amount sanctioned is derived based on it, while a personal loan can be flexibly availed based on the maximum loan amount provided by the lender.
Today, with many credible instant cash loan apps such as Hero FinCorp instant
personal loan app, a venture by Hero FinCorp, that is a fully digitized user-friendly, innovative instant personal loan platform. You can now avail of instant personal loans up to Rs.3,00,000 with
Hero FinCorp at a low rate of interest starting from 11% per annum. With a hassle-free paperless documentation and approval process, loan disbursal generally happens within a business day. Getting a personal loan appears to be easier as compared to a PPF loan.
