Personal Loan Vs. Loan Against PPF – Which One Should You Choose?

Personal Loan vs. Loan Against PPF – Which One Should You Choose?

Key Features	Personal Loan	Loan against PPF
Definition	Short-term unsecured loan	Short-term unsecured loan
Repayment Option	Flexible repayment ranging between a few months – several years	The loan should be repaid within 3 years of sanction
Purpose of loan	No restrictions on utilization of funds	No restrictions on utilization of funds
Eligibility	Both salaried and self-employed individuals are eligible	All individuals with a PPF account can avail loan based on certain conditions
Approval Process	Instant Approval within a few hours	Loan available from 3rd to 6th year of PPF account opening, and approval involves certain procedures.
Amount of Loan	Being small cash loans, lending parameters normally range between Rs.50,000 – Rs.3,00,000. However, it differs from lender to lender.	A loan given against a caveat, states that the loan availed cannot exceed 25% of the available amount in the PPF account at the end of the second year, which immediately precedes the year when the loan is applied.
Rate of Interest	Interest ranges between 11% – 35% per annum based on the lender.	Irrespective of the loan sanctioned, interest is charged at a nominal rate of 1%, but the account holder does not get paid any interest on the PPF amount until the loan gets repaid.
Penalty	May vary as per individual lenders.	If the loan is not repaid within 3 years, then interest has to be paid at 4%
Number of loans	Can avail of more than one personal loan if you pay regular EMIs and hold a good credit history.	Only one loan is allowed per fiscal year.

Which One Should You Choose – Personal Loan or PPF?

The choice would depend on whether you require a loan that is available at a low rate of interest but which would take time to get sanctioned like a loan against PPF or a loan that is easily available for a longer period like a personal loan but at a slightly higher rate of interest.
 
A loan against PPF would not be beneficial if you do not have enough funds in your PPF account as the loan amount sanctioned is derived based on it, while a personal loan can be flexibly availed based on the maximum loan amount provided by the lender.
 
Today, with many credible instant cash loan apps such as Hero FinCorp instant personal loan app, a venture by Hero FinCorp, that is a fully digitized user-friendly, innovative instant personal loan platform. You can now avail of instant personal loans up to Rs.3,00,000 with Hero FinCorp at a low rate of interest starting from 11% per annum. With a hassle-free paperless documentation and approval process, loan disbursal generally happens within a business day. Getting a personal loan appears to be easier as compared to a PPF loan.