Compare PPF loans and personal loans. Learn the key differences in interest rates, loan amounts, repayment periods, and eligibility. Choose the right loan for your needs.

If you suddenly need money, you can take a loan against your PPF account or a personal loan from a bank. Both options can be helpful for medical bills, job loss, or unexpected household expenses. However, the interest rates, loan terms, and repayment rules differ.

What is PPF loan?

PPF, or Public Provident Fund, is a government-backed savings scheme. If you have a PPF account, you can take a loan against it if you meet certain conditions. The interest rate on PPF for the October-December 2026 quarter is 7.1% per annum. The interest rate on PPF loans is 1% higher, at 8.1% per annum.

However, this loan is not available at all times. It requires fulfilling certain conditions regarding the account tenure and the amount deposited.

What is a personal loan?

A personal loan is a loan you can take out from a bank for medical expenses, home renovations, or other needs. The bank considers your income, credit score, and repayment ability. Personal loan interest rates vary from bank to bank. Some banks can start at around 10% per annum. Additionally, banks may charge a processing fee.

What is the difference between PPF loan and personal loan?

• Interest rate: PPF loans generally have a lower interest rate. Personal loans can have a higher interest rate.
• Loan amount: The amount of a PPF loan depends on the balance in your account and the established rules. The bank determines the amount of a personal loan based on your income.
• Repayment period: A PPF loan is typically repaid within 36 months. Personal loan EMIs are payable according to the loan's fixed tenure.
• Eligibility: A PPF account is required for a PPF loan. Personal loans also require fulfilling bank requirements.

What will be the EMI for a personal loan of ₹1 lakh?

Suppose you take out a personal loan of ₹1 lakh for two years at 12% annual interest. Your EMI would be approximately ₹4,707. Over two years, you'll pay a total of approximately ₹1.13 lakh, including interest of approximately ₹13,000. Processing fees may apply.

Which loan is better to take?

If you have a PPF account and meet the loan requirements, a PPF loan can be a good option due to its low interest rate. However, if you need a larger amount or cannot get a PPF loan, you may want to consider a personal loan.

Before taking out a loan, be sure to review the interest rate, other fees, and repayment terms. Choose a loan that you can repay on time.

PC: Prabhat Khabar