The pandemic has been hard on individuals as well as nations and the global economy as a whole. While the government tries its best to implement measures to stabilize the economy, we as individuals have to take care of our own households. With pay cuts and job losses, even paying bills has become difficult for quite a lot of people. At such times, nothing can come to the rescue like an instant personal loan can.
To make things even easier for us, the government has come up with a loan that carries only 1% interest. Here are all the details about this instant personal loan and personal loan benefits.
Requirements for an instant personal loan at 1%
Firstly, you need a PPF (Public Provident Fund) account. This is the primary requirement. However, your PPF account must be at least 3 years old. Plus, you cannot avail this loan in case your PPF account is more than 6 years old. Basically, this instant personal loan is available within the period between the third and the sixth years of your PPF account.
How does this instant personal loan affect your PPF account?
Please note that you’re allowed to withdraw only 25% of your PPF account balance after the end of the second year immediately before the year of loan application. For an instance, if you make your loan application in 2020-21, you can receive 25% of your PPF balance as on the 31st of March, 2019. After the end of the seventh year, you can partially withdraw money from your PPF account.
Can you take one loan after the other?
This instant personal loan can be availed only once in a year. After you finish repaying your first loan, you can apply for the second one. However, some of the personal loan benefits in this case are that your credit score won’t make a difference, and that you need not have a collateral.
Additional Read: Dos and don’ts for an instant personal loan in India
What are the repayment terms for this loan?
You will have to repay the principal loan amount completely within 3 years. In case you do not make repayments on time, you will be charged 6% on the outstanding loan amount. You can repay it at once, or even in 2 or more monthly instalments. Once you are done repaying the principal amount, you are allowed to repay the interest amount in at the most 2 instalments.
How can you apply for this personal loan online?
For PPF account holders, the process to apply for this instant personal loan online is as follows.
- Visit the bank website
- Check for your eligibility in the ‘loan eligibility’ section.
- If you’re eligible, submit a duly filled Form D to the bank or post office.
- The turnaround time of the application will differ from bank to bank, depending on their policies.
- Most banks will allow you to apply for this personal loan online, but some might require you to visit the home branch once.
What are the personal loan benefits and drawbacks with this kind of loan?
The most obvious benefit of this loan is that it is much less expensive than any other kind of personal loan available right now. However, this loan should not ideally be your first choice in times of need. It might not be sufficient for a lot of working class needs. Your loan amount is limited to 25% of your PPF account balance. Plus, there are other aforementioned restrictions. Moreover, your PPF account won’t gather any interest in the loan tenure. You will hence lose out on the primary purpose of the PPF account and receive lower returns.
Additional Read: How to Choose the Best Personal Loan for Needs?
This loan is probably a good option once you run out of other options. However, there are quite a few other options in the market. You can easily check out and compare competitive personal loan rates online. You can also use personal loan eligibility calculators and personal loan EMI calculators on the official websites of various lenders to figure out exactly how much a loan will cost you.
One excellent option would be Tata Capital Personal Loan, which offers not only an attractive interest rate, but also comes with flexible repayment tenures, quick and easy processing, and a host of added benefits.