The COVID-19 pandemic has caused a lot of financial turmoil in the country. Amidst this meltdown, the requirement for an emergency source of financial back up has become extremely important. Therefore, there are two important options for the common citizens of India: an EPF Advance withdrawal or a short term personal loan. The differences between the two are both in logistical as well as fundamental terms.
What is an EPF Advance withdrawal?
Following the pandemic and the huge amounts of loss in the job market, India’s Finance Minister Nirmala Sitaraman had declared an added bonus for your EPF Advance withdrawal opportunities. You may withdraw from your account 75% of your savings or a sum of your salary (including the basic amount and any dearness allowance you might be enjoying) for three months. The amount which would be lesser among these two options would be the maximum that you can withdraw from your EPF account.
EPF or the Employee Provident fund is a scheme whereby the employee and the employer deposit a part of their monthly earnings so that the amount can be given back to the employee upon retirement. This scheme has a fund, and it is from this fund that the employees can now withdraw, according to the revised rules.
However, there are certain terms and conditions to this withdrawal. As compared to the regular EPF rules applicable to any organisation with more than twenty members, this emergency withdrawal can only be done in organisations with more than one hundred employees. If only less than ten percent of them earn more than fifteen thousand rupees a month, only then can it be applied. It also takes a huge toll on your retirement savings, as the interest rates on your EPF are very high and would take a hit if you withdraw a huge amount.
What is a short term loan?
A short term personal loan, on the other hand, is a lot different. It is a scheme where you can take a short term loan from any bank, showing your consistent source of income at an amicable interest rate. Compared to buying the necessary items using a credit card, this method is far more economically efficient and sound. This is because the personal loan interest rate is much lesser than that of a credit card. Given the fact that you have a stable source of income, you would not face any problem getting such a loan from your bank. What is more, you can use it for any purpose, and you would not owe the bank any kind of explanation. You just have to return the money on time, with the due interest.
The pandemic has caused a lot of people to lose their jobs, or experience some kind of cuts in their salary. Under these circumstances, a short term personal loan would be one of the best decisions you can possibly take. Not only can you invest it smartly at any economic outlet including the share market, but it would also come with a flexible tenure of repayment, depending upon the bank from which you have availed the loan. Depending on when your financial situation gets strong and the larger plan of your expenditure, you can always choose a short term personal loan from the wide range of them available across platforms.
Additional Read: How to Check Personal Loan Overdraft Eligibility?
Why is a personal loan better?
- You do not have to worry about your future after you have paid back the short term loan you had once asked for.
- The pandemic would definitely wade away after a point, and the economic condition of the country would stabilise eventually.
- However, if you had taken an EPF Advance withdrawal from your fixed amount, then it is not guaranteed that the government or the company you work for would give you a chance to deposit that amount back to your EPF over time.
Additional Read: Things you need to Know about Personal Loan Prepayment Option
Tata Capital’s Unsecured Personal Loan would suit you best if what you’re looking for is low interest rates, easy ways of repayment and flexible tenure. This personal loan would cover for all your possible expenses until the worst is behind you.