Public Provident Fund (PPF) is not only a means of long-term investment for you, but it can also come in handy in times of financial trouble. In such circumstances, you can take a loan against the amount deposited in this account and the rate of interest is also the lowest in it. Due to Coronavirus lockdown, people are facing financial crunch and in such a situation, this PPF account can help them.
A feature of PPF account is that you can take a loan based on the amount deposited in it. In this, the rate of interest is the lowest compared to personal loans, gold loans and loans taken on FD. On PPF you get a loan at only one percent interest rate.
Manikarna Singhal, a registered tax and investment expert from SEBI, said, “Loans on PPF are cheaper than personal loans, gold loans and loans against FDs, in which you have to pay only 1 percent interest. You will get PPF loan based on the amount deposited in the account, while banks and other financial institutions give loan based on your income. So everything depends on how much amount is deposited in your PPF account. If you can work on it by taking a loan, then it is the best option because you have to pay the lowest interest.
PPF loan terms and conditions:
1. You can take a loan from the third year of opening a PPF account, before that you will not get a loan on it.
2. You can take a loan on your PPF account from the third to the sixth year only. If you opened an account in December 2017, you can take a loan from 2019 to 2022-23.
3. You can take only 25 percent of the total amount deposited in the account as a loan. If you take a loan in the third year, it will be calculated based on the amount deposited in two years.
