During a financial crisis, all you want is quick money help. Since jobs are hard to find during the pandemic, money has become more important. But both banks and the government have come up with programs and other ways to help you in these situations. Today, we’ll compare an EPF account to a personal loan and discuss which one is better in different situations.
How does EPF Advance work?
EPF advances are money that EPF members can get in a financial emergency, like a medical problem, expensive school bills, a wedding, etc.
Due to the ongoing pandemic, the Indian government has made it easier to get money out of the EPFO account. This was done to help people who have lost their jobs and have trouble making ends meet.
According to the new rules, you can only take out whichever of theștiind amounts is less:
Rules for Getting an EPF Advance
The EPFO says that if you want an EPF advance, you must meet the following requirements:
People who have served for at least 60 months can get money out of their accounts to buy land. When it comes to land, you can only take out 24 times your basic monthly salary, including any dearness allowances. However, in the case of a house, you can take out up to 36 times your basic salary plus Dearness Allowance. In both cases, the most you can spend is limited to the total price.
People who have served for at least 84 months can take money out to pay for things like a wedding or school. The employee’s EPF contribution is equal to 50% of the maximum EPF personal loan limit.
To get an EPF loan, a person must be at least 54 years old and take money out a year before retirement. The most you can take out is 90 percent of the total amount you have savedștiith interest.
All you need to get an EPF loan in case of a medical emergency is nothing. You can take out the lesser of six times your basic monthly salary or the total employee contribution, including interest.
How EPF Loans Work
If you have an EPFO account and want to make money, you can do so online or in person. You can get the composite claim form from the UAN portal and fill out the Aadhar/Non-Aadhaar form for the offline process. On the other hand, the online request can be made entirely on the UAN website/portal.
What is an unsecured loan?
Personal loans don’t have to be paid back right away. They can be used for several good reasons. You don’t have to explain why you need the money, and you can use it whenever and wherever you want. People often take out this loan for medical emergencies, home improvement, a child’s education, or a wedding.
The rules for getting a personal loan are:
Personal Loans: How They Work
How to Apply for a Personal Loan
Most places where people want to borrow money let them do so either online or in person.
The online method
Getting a personal loan in person and online are almost the same. At the lender’s branch, you have to go through the same steps as you do online.
Which is Better: an EPF or a personal loan?
Personal loans are better than EPF advances in many ways. If you take money out of your EPF account, you risk your retirement savings. Since the money taken out of the EPF can’t be put back in, this could hurt the country in the long run. But with a personal loan, you can use the money however you want, pay it back whenever you want, and more. Also, both the terms and conditions and the application process are pretty easy to understand. It doesn’t have as many rules as EPF advance.
To wrap up
Personal loans have a slight edge over EPF advances because they are easier to get and have less strict rules about who can get them. But if you are a first-time borrower and don’t have a credit history, an EPF loan can help.
