Most of the business activities have come to a standstill due to the ongoing lockdown across the country to prevent the spread of coronavirus. People are taking top-up loans over their personal loan, gold loan, FD (deposit) and credit card to meet financial needs. However, in these situations they have to pay higher interest. To avoid this, you can also take a loan from your PPF (Public Provident Fund) account at an interest of just one percent.
Under this, one can apply for a loan on PPF, from the third year to the seventh year of opening the account. From the third year, you can get a maximum loan of 25% of the deposit in two years. Earlier, the account holder had to pay 2 percent interest to take a loan on PPF, but the government has reduced it to one percent for 2020.
If you have opened a PPF account in 2019-20 and are investing 1.5 lakh rupees annually then by the end of two years, around Rs 3.1 lakh gets deposited in the account with interest. In such a situation, you can apply for a loan up to a maximum of Rs 77,500 in the third year, which is 25 percent of the deposit amount. The loan amount will increase with time, that is, in the fourth, fifth, and sixth year you can apply for more loans. Take help only if helplessness.
Experts say PPF is a popular means of investment due to tax exemption. It gets a tax rebate on both investment and returns. However, this discount is not available until the loan amount is exhausted along with interest in taking a loan. In such a situation, if there is a lot of compulsion then only choose this option and withdraw at least the amount, that too for a short period.
Loans on PPF are much cheaper than other types of loans. For personal loans, you have to pay 9.30 to 14 percent, on gold loan 9.10 to 12 percent, and on FD loan up to two percent more than the interest on FD. In such a situation, it is cheaper to take a loan from PPF account than these options, but one should avoid opting for this option in view of the loss in the long term