Where you get the highest interest on PPF deposits, the loan is also the cheapest, that too without any hassle. Taking a loan against PPF is also easy because you do not have to pledge anything. It is also easy to repay the loan with the partner.
New Delhi. The Corona period has made the employed and small business people realize the seriousness of the sudden economic crisis. Now many want to know about such options from where they will get easy and cheap loan in financial crisis. One such loan option is PPF. Where you get the highest interest on PPF deposit, the loan is also the cheapest, that too without any hassle.
Taking a loan against PPF is also easy because you do not have to pledge anything. It is also easy to repay the loan with the partner. You can take a loan against PPF at any time from the end of the year in which you opened the account to the next one year.
How much is the loan
You can apply for the loan within the next five years from the end of the year of opening of the PPF account. In this, up to 25 percent of the amount in the account at the end of the first two years of the year in which you are applying for the loan can be taken as a loan. The PPF account holder will get the loan again only after paying the loan taken before that along with interest. If you have not paid the entire loan amount along with interest, then the new loan will not be given. A PPF holder can take only one loan in a year.
Loan interest and payment
The principal amount of the loan has to be paid by the account holder from the first day of the month in which the loan is taken till the end of 36 months. You can pay it in lump sum or in installments also. After paying the principal amount in full, the account holder will have to pay interest in two monthly installments at the rate of one per cent per annum of the principal amount. This principal amount will be the principal amount during the period from the first day of the month following the month in which the loan is taken to the last day of the month in which the last installment is paid.
Need to repay the loan within time
If the loan is not repaid or only partially repaid within a period of 36 months, the remaining loan amount will attract interest at the rate of six per cent per annum. This six percent interest will be from the first day of the next month in which the loan is taken, till the last day of the month in which the last installment will be paid. That is, if the loan is not repaid within 36 months, the interest rate which was earlier becoming 1 percent, will become 6 percent from the beginning of the loan.
PPF account must be active
Interest on the outstanding loan will be charged from the account holder’s account at the end of every year if the loan is not paid before the end of the period of 36 months. If the account holder dies, his nominee or legal heir will pay the interest on his loan. If your PPF account is not active then you cannot take loan against it. Apart from this, until the first loan taken against PPF is not repaid, the second loan cannot be taken on it.
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