Money Excel - Personal Finance Blog

Menu
MENUMENU
MENUMENU
  • Home
  • Business Ideas
    • 225 Small Business Ideas
    • 40 Online Business Ideas
    • 20 Business Ideas for Beginners
    • 20 small manufacturing business
    • 30 Food Business Ideas
    • 100 Business Ideas low investment
  • Stock Market
    • Best Demat & Trading Accounts 2020
    • Best Stocks 2020 by Experts
    • Best Virtual Trading Apps
    • Best Stock Screener
    • Best Discount Brokers in India
    • Multibagger Stocks of LockDown
    • Rakesh Jhunjhunwala Portfolio
  • Mutual Funds
    • Best Mutual Funds 2020-21
    • Best Direct Mutual Fund Platform
    • Best Mutual Fund Mobile Apps
  • Incometax
    • Income Tax Slab FY 2020-21
    • Income Tax Calculator FY 2020-21
    • Income Tax Refund Request
    • Pay Advance Tax Online
    • Download New 15G -15 H Forms
  • Investment
    • Best Investment Ideas 2020
    • Long Term Investment Options
    • Best Investment Regular Income
    • Best Investment Options NRI
  • Credit Card
    • Best Credit Cards 2020-21
    • Best credit card for online shopping
    • Best Forex Card in India
    • Best Business Credit Cards
    • Credit Cards against Fixed Deposit
  • Insurance
    • Best Term Insurance Plans 2020
    • Best Health Insurance 2020
    • Best LIC Policy 2020
    • Best Car Insurance Companies
    • Best Mobile Insurance Companies
  • Downloads
Home
Personal Finance
How to take PPF Loan against account balance?

How to take PPF Loan against account balance?

Raviraj Parekh May 21, 2020

PPF Loan

Public provident fund (PPF) is one of the best tax saving investment option. If you have PPF account you are entitled to take PPF Loan against your account balance. PPF Loan is available at low interest for the shorter duration.

Imagine a situation where you need a cash urgently. What do you do? Generally, you approach a bank and take a personal loan. A personal loan is the fastest way to get money from a bank. However, please note that taking a personal loan is a costlier affair. The interest rate charged on the personal loan is very high 14-24% compare to loan against PPF balance. Let’s take a quick look at PPF Loan and its benefits.

Also Read – PPF Account Calculator Download

PPF Loan against account balance

PPF Loan Eligibility

Do not miss below posts -
  • New PPF Rules – Premature Closure Relaxation
  • Job Loss or Pay Cut – How to Protect & …
  • Inoperative EPF account – Interest up to 58 years of …
  • PPF Loan can be taken by PPF subscriber after second financial year from the date of the opening account. Suppose you opened the account in FY 2014-15. You are eligible to apply for PPF loan in FY 2016-17. PPF accounts follow April to March as a financial year.
  • You cannot take a loan from PPF account seventh year onwards as you are qualified for the partial withdrawal of money from PPF account.
  • The Loan amount cannot exceed 25% of PPF balance amount.
  • PPF loan is given for 36 month time frame. You can make repayment lump sum or in monthly installment.
  • You can take the second loan once you repay the first loan.
  • The Interest rate charge will be 2% higher than PPF interest rate. This means if you currently applied for PPF loan you will be charge 8.7% + 2% = 10.7% interest.
  • If you fail to repay the loan in 36 months 6% additional interest will be charged.

PPF Loan

PPF Loan Benefits

  • PPF loan is low cost compare to personal loan. In case of PPF loan, you will be charged 2% extra interest on PPF interest rate.
  • You need not to produce any document or need not to place anything as a mortgage.
  • Loan prepayment period is 36 month.
  • Prepayment can be made either lump sum or in monthly installments.
  • No prepayment penalty & No pressure of EMI payment.
  • You can avail this loan easily. Processing period of this loan is one week.
  • No fear of recovery agents.

Also Read – Smart way to earn more money through PPF

PPF Loan Schedule

PPF Account Opened 20th April 2014
Eligible for PPF Loan 1st April 2016
PPF Loan End period 31st March 2019
Maximum Loan in FY 2016 -17 25% of the balance as on 31st March 2015
Maximum Loan in FY 2017 -18 25% of the balance as on 31st March 2016
Maximum Loan in FY 2018 -19 25% of the balance as on 31st March 2017
Maximum Loan in FY 2019 -20 25% of the balance as on 31st March 2018
Account Eligible for Partial Withdrawal 50% of account balance can be withdrawn

How to take PPF Loan?

Follow the steps given below to avail loan from PPF account.

  • Loan against PPF balance can be applied in prescribed form called as FORM D.
  • Fill up the FORM D and submit it to the bank.
  • You need to specify the detail about loan taken previously and PPF account number.
  • You also need to enclose the PPF passbook along with application.

Once you submit the application bank will take 6-7 days for processing your loan.

Repayment of PPF Loan

  • You need to make the repayment of PPF Loan within 36 months.
  • You need to pay principal and interest amount separately.
  • The principal amount can be paid with monthly installment like EMI or on lump sum basis.
  • After the principal amount of the loan is fully repaid, you need to pay the interest amount in not more than two monthly installments.
  • In case the loan is not paid within 36 months 6% additional interest shall be charged. (14.7% as per current PPF interest rate).

Dark side of loan against PPF account balance

Do not miss below posts -
  • 20 Money Saving Habits for 2014
  • Love Money and Relationship
  • Get Ready for Retirement – Including Free Retirement Planner
  • The loan amount is limited 25% of the balance. If you deposit 1.5 Lac maximum amount for two years you can apply for loan amount Rs.75000. (25% of the balance)
  • You have a very small window of 4 years for availing this loan facility. From 3rd financial year to 6th financial year.
  • If you are unable to pay the loan on time you will be charge 6% additional penalty. This means you need to pay 14.7% interest which is at par to personal loan.

Conclusion –

PPF is long term investment option made for retirement. It is not advisable to stake your PPF saving by taking loan.  You should take PPF loan only in unavoidable circumstances.

Prev Article
Next Article
Tags:how to take PPF loan loan against ppf balance loan on PPF ppf balance loan PPF loan PPF loan facility

About The Author

Raviraj Parekh

Raviraj is the man behind moneyexcel.com. He is PGDBA, engaged in blogging for 10 years. Moneyexcel blog is ranked as one of the Top 10 Personal Finance Blog in India. He is not affiliated with any financial product, service provider, agent or broker. The purpose of this blog is to spread financial awareness and help people in achieving excellence for money. Please note that the views expressed on this Blog/Comments are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment advice or legal opinion.

One Response

  1. sanjeev gargish

    very informative article

    Thanks

    July 10, 2016

Leave a Reply

Cancel reply

IIFL Demat Account

Search

Top Posts & Pages

  • Income Tax Calculator FY 2020-21 (AY 2021-22) – Excel Download
  • Rakesh Jhunjhunwala Portfolio Holdings - January 2021
  • How to check Property Records and Land Records online in India?
  • 20 small manufacturing business ideas with low cost
  • LIC Premium Paid Certificate Download For Income Tax Purpose - Online
  • 225 Small Business Ideas with Low Investment in 2021-22
  • Cash Deposit Machine Locator – How to find CDM Near You?
  • Top 60 Manufacturing Business Ideas
  • 10 ways to Convert Black Money to White
  • Income Tax Calculator FY 2019-20 (AY 2020-21) - Excel Download

Subscribe to Blog via Email

Join 5,472 other subscribers

Follow MoneyExcel

Money Excel – Personal Finance Blog

Personal Finance Blog
Copyright © 2021 Money Excel - Personal Finance Blog
| About |Downloads | Contact Us | Sitemap | Disclaimer | Privacy Policy |