Loan from PPF or personal loan – which is better?

POSTED BY Ram ON January 21, 2013 3:06 pm COMMENTS (7)

Dear members

I have a shortage of about Rs 1 Lakh cash for some investment.

I would request you to guide me is it advisable to take a Personal Loan for that amount or Partial Withdrawal from PPF accuont. Which one is better among these two?

I spoke to SBI and they informed I can take a partial withdrawal of about 60000/-.

Pl. advise me if I am losing any benefits if I partially withdrew from PPF. (I am operating PPF for the past 9 years and till date no partial withdrawals or loans taken from ppf).

Thanks in advance, Ram

7 replies on this article “Loan from PPF or personal loan – which is better?”

  1. Credexpert says:

    Dear Ram,

    We would advise that you opt for the partial withdrawal from your PPF account as Personal loans are unsecure loans and come with high interest rates. You can also read the article “Personal Loans are Easy to Get, but Come at a High Cost” on published in Economic Times dated 3rd January 2013 to know how such loans should be availed only in times of crisis.

    Also, ask the bank if you lose any benefits by partially withdrawing from your PPF account.


  2. Dear Ram, please opt for PPF withdraw for 60K Rs. & balance arrange from friends & relatives. Use PL as only last option.



  3. Dear Ram, is it for investment or consumption that’s you are in need of money? if you are going to use this 1l Rs. for this year’s tax saving at this last stage, my personal choice ‘ll be to redeem 60K from PPF, reinvest the same into PPF & do nothing for remaining 40K.

    You ‘ll pay some tax only which is far better than paying interest on your personal loan.



    1. Ram says:

      Dear Ashal Ji

      This is not related to Income Tax related issues.

      I would like to take the loan for purchasing a land. I am falling short of Rs1 Lakh for the transaction.

      Shall i take a personal loan for that amount or partially withdraw from PPF. Which one is best one. Anyhow, I will repay the loan or PPF in next 4 months of time frame.

      Thanks, Ram

  4. getting loans of any kind for investments is not advisable!

    getting a personal loan for any kind of requirement is not advisable. Whatever you decide don’t get a personal loan!

    If you withdraw from PPF you will lose the power of compounding and your original intentions of opening the account (perhaps for retirement) will be affected.

    Consider other sources like selling jewels or loan from relatives. If you cant do this and insist on the investment then PPF is the lesser evil but evil nonetheless!

    1. Ram says:

      thank you sir for your information. But, I would be closing loans (any one) within next 4 months period.

      thanks, Ram

      1. please go with PPF loan instead of personal loan

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