Loan against PPF account at 1 percent interest rate #shorts #ppf #loan

Do Read this first completely:
1. You can avail a loan against your PPF account between the 3rd and 5th year of opening it.
2. The maximum loan amount is 25% of the PPF balance from two years prior to the loan application.
3.The PPF loan interest rate is 1%.
4.The loan must be repaid within 36 months. If not repaid within 36 months, the interest rate jumps from 1% to 6%.
5. The PPF balance stops generating interest while the loan remains unpaid. Since PPF interest is completely tax-free, taking a loan against it results in a loss of this benefit. For instance, if the current PPF interest rate is 7.1%, availing a loan effectively increases your borrowing cost to 8.1%.
No interest is earned on the PPF balance until the loan is fully repaid.

SO WHEN should you take a PPF Loan?
Take it IF:
1. You need a small loan for a short period and you want lower interest than personal loans ( high as 12-14%)
2. You are sure you can repay within 3 years.

Avoid it IF:
1. You have other sources of borrowing
2. You don’t want to lose interest on your remaining PPF balance.
3. You need a longer repayment tenure.

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