Loan Against PPF vs Personal Loan:
With Diwali and other festive expenses coming up, many people look for quick ways to manage their finances. Two popular options are loans against the Public Provident Fund (PPF) and personal loans. Though both can provide immediate funds, they are different in terms of cost, security, and flexibility.

Loan Against PPF vs Personal Loan:

A loan against PPF is a secured loan, meaning it is backed by the money you have in your PPF account. You can borrow up to 25% of your PPF balance, and the interest rate is usually 1–2% higher than the PPF interest rate (currently around 7.1%). These loans are ideal for short-term needs, such as small medical emergencies or household repairs. The repayment period is limited to 36 months, and the loan can be taken only once in a financial year.

In contrast, a personal loan is unsecured, meaning it doesn’t require any collateral. The loan amount depends on your income and credit score, and interest rates start around 9.99% per annum. Personal loans offer higher amounts and more flexibility, with repayment tenures ranging from 12 to 60 months. They are suitable for larger financial needs like weddings, travel, education, or medical treatments.

However, borrowers must be careful while choosing personal loans. Missing EMI payments can harm your credit score and increase your debt burden. High interest rates also make them costlier in the long run. On the other hand, PPF loans are cheaper and safer but limited in amount and slower to process.

So a loan against PPF is best for small, short-term expenses, while a personal loan is better suited for larger, urgent needs. Borrowers should compare interest rates, repayment options, and their financial capacity before applying. Always plan carefully to avoid unnecessary financial stress.

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