How to get loans against a PPF (Public Provident Fund)

A Public Provident Fund is a fixed investment scheme that allows an employed individual to earn a certain amount of money after a fixed period. PPF is quite a popular investment scheme and can be really beneficial for you in the long term. Now, you can also get a loan on the basis of your Public Provident Fund (PPF) account. If you are looking to get a loan, but do not wish to offer any collateral in exchange, then you can get one on the basis of your PPF account.

Want to learn more about how you can get your next loan using your PPF account? Here’s everything that you need to know about.

How to get a personal loan against PPF?

When you invest in a PPF account, you cannot withdraw the sum immediately if you need it. Instead, it will take up to 6 years until you can get the amount back. Therefore, if there is any emergency, you can only take a loan on the basis of your PPF account. 

To get your PPF loan, you will first have to approach your nearest post office and collect Form D. Next, you (if you are the PPF account holder) will have to fill up the details on the form and then submit it back at the post office where the account is held. 

While you are filling out the form, you will have to provide details such as the PPF account number, the loan amount, a copy of the passbook and a statement saying that you will repay the full amount of the PPF loan within a span of 3 years.

Read more: Top 7 benefits of a personal loan that you should know

What are the benefits of getting a personal loan on a PPF account?

Here are some of the biggest benefits when you apply for a personal loan against your PPF account:

• The loan applicant will not have to offer any asset as collateral – the PPF funds are the collaterals themselves
• You will have a time period of 3 years or 36 months to pay off the loan, which is sufficient for most people
• The PPF loan interest rate is extremely low 
• You can choose to pay the interest on your loan amount within 1 or 2 instalments

How to apply for a personal loan from a PPF account?

Here are the steps that you need to follow to apply for your personal loan from your PPF account:

• Ensure that you have a PPF account already
• Calculate the loan amount to borrow – you can only borrow up to 25% of your PPF amount
• Fill out Form D – you can get it at any post office
• Enter the details as required
• Submit your application
• Await loan application approval

Read more: Learn all about the minimum salary needed to get a personal loan

What are the eligibility criteria for an online loan on PPF?

Any person who is holding a PPF account is eligible for a loan against their PPF account. However, you should remember that a loan against the PPF account facility is only available to account holders who are between their 3rd and 5th year of account opening. PPF loans are short-term loans (3 years) and hence they must be paid back within that time span.

Important things to remember after taking a loan against your PPF account

Here are some important pointers to know about your loan against your PPF account:

• If you have paid off the loan but still haven’t paid back the interest that owe, then that interest will be deducted from your PPF account
• You will be eligible for your second PPF loan only if you have made the complete payment on your first PPF loan. 
• It is necessary that you pay the principal first and then the interest needs to be paid within one or two instalments
• As long as the loan repayment is not complete, your PPF account balance will not get any income

Read more: How to get personal loans for self-employed in India?

Should you take a loan against your PPF account?

The biggest benefit of a loan against your PPF account is that you will have to pay a very low rate of interest. Moreover, you will also not need to offer any collateral and the loan application process is also hassle-free. Therefore, if you need funds instantly, then you can surely go for a loan against PPF.

However, if you are looking for more ways to get loans, then apply for a personal loan from Airtel Flexi Credit. Get low-interest rates, flexible credit repayment options, instant credit approval without any collateral and much more!