Applying for Easy Loans to Pay Bills During Lockdown: How to Apply


The rapidly spreading coronavirus has crippled the economy. Some people lose their jobs, while others survive on pay cuts or unpaid leave. Bill payments, IMEs, or other daily necessities are on the horizon and there is hardly any option to fund the cash shortage.

While the Reserve Bank of India and the government have come forward to save individuals by allowing an EMI moratorium on term loans and a partial withdrawal from PFOA, this may not be enough for everyone or may not apply. to all.

If you are considering taking out loans to fill that temporary shortage of funds, you have a cheaper option where you can take out a loan for just 1%.

What are the conditions for an easy 1% loan?

The first condition to apply for the loan is to have a “PPF account”. If you have a PPF account, you can take out a loan against it at an interest rate of only 1%.

However, you are only entitled to it for the third year since opening the account. The loan window ends after the expiration of the sixth year. This means that the loan will only be available between the third and sixth year since opening the account.

What is an effective return on investment?

The effective interest rate is much higher since PPF investments that are worth the loan amount do not earn interest until the loan is repaid, even if you only pay 1% interest on the loan amount. Amount of the loan.

Earlier this month, the government reduced the return on investment of the PPF from 7.9% to 7.1%. Therefore, if you borrow money from your PPF account now, your effective ROI will be 8.1 (7.1 + 1) percent.

How to withdraw money from the PPF account?

Note that you can only withdraw 25 percent of the PPF account balance at the end of the second year immediately before the year in which you apply for the loan.

For example, if you apply for the loan in the current 2020-2021 fiscal year, you will receive 25% of the balance as of March 31, 2019.

From the seventh year, you can make partial withdrawals from your PPF account.

How can the loans be taken out one after the other?

The loan can only be given once a year, and you can only take out the second loan after you have made full payment on the first loan.

Demand does not depend on their credit score, nor do borrowers need to commit to providing collateral for the PPF loan.

How is the loan repaid?

If payments are not made on time, 6% is taken from the outstanding loan. You must repay the principal of the loan in 36 months or 3 years.

You must make the full payment all at once, or in monthly installments (2 or more) After the principal has been paid, loan interest must be paid in no more than two installments.

How to apply for a loan on the PPF account?

Users who have a PPF account can only apply through this method.

  • Visit the bank’s website
  • Check your loan eligibility
  • To apply for the loan, submit a Form D to the relevant bank or post office.

Most banks offer online services to submit the form. however, in some cases you may need to visit the home branch. The application (whether online or offline) and turnaround time differ depending on the lending bank or post office.

Why borrow from the PPF account?

The Loan Against PPF account is cheaper than any other personal loan, but it doesn’t have to be a consumer’s first choice. The other limitation with this option is that the loan amount will not necessarily be enough for many borrowers.

“Taking loans from PPF is not a good idea as the loan amount is limited to smaller amounts due to the fact that you can only take a loan for 25% of the account balance and there is restrictions on the year in which you can In addition, during the loan period, the account earns no interest and therefore one will lose the compound benefits and end up with much lower returns, ”Mrin said Agarwal, founder of Finsafe India.

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