We have already discussed the benefits of applying loan against PPF account over personal loan. Now as you are ready to take a PPF loan, then I think it is better to know various conditions for PPF loan to make the process more smooth for you.
Applying a personal loan against PPF account is very easy. But you should know some facts to get eligible for PPF account loan. In this article, I will share such 10 things which will help your understand how this loan against PPF works in real time.
Must Know Facts of PPF Account Offers Loan Facility
1) The first point I want to share here is, you can apply for maximum 25% of your current PPF balance only. E.g. if you have 10 lakh in your PPF account as on date, then the maximum eligible loan amount will be Rs 2.5 lakh only. If this fulfill your loan requirement then PPF loan is the best choice compared to personal loan.
2) If you have opened a PPF account just few months ago only, then you have to wait till your successfully completed 1 full duration of Financial year before you are approaching for PPF loan.
3) You can take loan up to 5 Financial year age of your PPF account. So don’t think that you will wait for 10 years to make a good PPF balance and then apply for loan.
4) The repayment period is fixed here. You have to pay the PPF account loan by 3 years from the date of taken or 36 months. In case of delay, you have to pay an extra 6% interest.
5) The interest rate of PPF loan is always 2% extra of current interest on PPF account. That means right now the PPF account interest rate is 8.7% for the current financial year. If you apply for loan in this FY, you can get a loan against PPF balance @ 10.7% only, which is cheapest personal loan in India.
6) After taking loan from PPF account, your PPF account deposit rules and interest rules will be as it was. Means your account will accumulate interest as per the remaining balance only.
7) The interest on outstanding loan which has not been paid before 36 months or paid partly will be debited from the subscriber’s account at the end of each financial year.
8) You can take another loan or 2nd PPF loan only after repaying the first PPF loan completely considering all other rules mentioned above.
9) If you take a loan against PPF account and the repaid the same in the same Financial year, you can’t apply the 2nd loan in the same FY.
10) The most important point to mention here is that, you have to keep your PPF account active by paying minimum Rs 500 / year contribution to get eligible for loan against PPF account.
So, I think this is enough for you to know about loan against PPF account. In case you have further queries, feel free to write a comment below. I would love to answer the same as per my knowledge.