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Personal Loan

Personal Loan vs. Loan Against PPF: Which One Should You Pick?

Key Takeaways

  • Key Takeaway ImageA loan against PPF lets you borrow up to 25% of your PPF balance between the 3rd and 6th year, but the amount is capped and your savings remain locked until repayment.
  • Key Takeaway ImagePersonal loans are unsecured, allow for higher loan amounts, and don’t require you to touch your long-term savings.
  • Key Takeaway ImageFIRSTmoney Personal Loans offer instant approvals, flexible repayment options, and no foreclosure charges—ideal for both planned and unplanned expenses.
  • Key Takeaway ImageThe choice between a PPF loan and a personal loan depends on your borrowing needs, the urgency of funds, and whether you want to protect your retirement savings.
  • Key Takeaway ImageFor those seeking speed, flexibility, and convenience, personal loans from FIRSTmoney offer a paperless, collateral-free alternative.
16 Jul 2025 by Team FinFIRST
Personal Loan vs. Loan Against PPF: Which One Should You Pick?
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Need to pay for a big purchase or manage an unexpected expense? It’s common to look at your Public Provident Fund (PPF) as a fallback—after all, it’s secure and offers low interest rates. But tapping into your PPF might not always be the best financial move.

Before you borrow against your long-term savings, it’s worth considering a personal loan. It could give you faster access to funds, more flexibility, and the ability to keep your retirement savings intact.

Let’s break down both options so you can make an informed decision.

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What is a loan against PPF?
 

A loan against your PPF allows you to borrow a portion of your PPF balance without fully withdrawing funds. However, this option comes with a few limitations:

  • You can borrow only between the 3rd and 6th year of your PPF account’s tenure.
  • The loan amount is capped at 25% of your balance from the second year preceding the year of borrowing.
  • The interest rate is 1% above the prevailing PPF interest rate—making it relatively low-cost, but still restrictive in terms of amount and timing.

While this option may seem attractive due to its low interest, it temporarily halts the compounding of your savings. Until the loan is fully repaid, that portion of your PPF won’t grow—reducing the long-term value of your retirement corpus.

What is a personal loan?
 

A personal loan is an unsecured loan that gives you access to funds without requiring you to pledge any assets. It’s designed for flexibility—you can use the funds for anything from weddings and medical bills to travel or home improvements.

With FIRSTmoney personal loans, you get:

  • Loan amounts of up to ₹10 lakh
  • Repayment tenures from 9 to 60 months
  • Competitive interest rates starting at 9.99% p.a.
  • Instant digital approval and disbursal
  • No foreclosure charges, if you want to repay early

You can apply online with minimal documentation, and there’s no need to dip into your investments or savings.

Personal loan vs. loan against PPF: A detailed comparison
 

Feature

Loan against PPF

Personal loan (via FIRSTmoney)

Collateral

PPF account balance

None

Loan amount Limit

Up to 25% of balance (after 3rd year)

Up to ₹10 lakhs depending on eligibility

Interest rate

PPF rate + 1%

Starting from 9.99% p.a.

Tenure

Must be repaid within 36 months

Flexible from 9 to 60 months

Usage restriction

Generally, no restrictions, but amount may be small

No restrictions

Processing time

May take days with paperwork

Instant approval via FIRSTmoney app

Impact on PPF savings

Reduces your PPF balance until loan repaid

No impact on your savings

Smart borrowing is about flexibility and freedom—choose a loan that meets your needs today without compromising your tomorrow.

When is a personal loan a better option?
 

A personal loan may be the smarter choice over a PPF loan in the following situations:

  • You need a higher loan amount than what a PPF loan allows (limited to 25% of your balance).
  • You want to preserve your PPF savings for retirement and avoid interrupting its long-term growth.
  • You need funds urgently and prefer a faster, paperless process without pledging any assets.
  • You value repayment flexibility and want the freedom to choose a tenure that suits your financial situation.

Why choose a FIRSTmoney personal loan?
 

With FIRSTmoney, you can access a fast, convenient, and secure way to borrow, without the typical restrictions of traditional loans.

  • Loan amounts up to ₹10 lakh based on your credit profile.
  • 100% digital application—apply through the FIRSTmoney website or IDFC FIRST Bank app with minimal documentation.
  • No paperwork needed— you only need to display your physical PAN card during the video KYC process.
  • Zero foreclosure charges, giving you the freedom to prepay your loan anytime without penalty.
  • Quick approval and instant disbursal, ideal for time-sensitive needs.
  • Attractive interest rates starting from 9.99% p.a., making borrowing more affordable.
  • Flexible tenures from 9 to 60 months, so you can tailor your repayment plan to your budget

Conclusion
 

While borrowing against your PPF can seem appealing due to low interest rates, the loan amount is restricted, and your savings remain locked until the loan is repaid. A FIRSTmoney personal loan gives you access to higher funds, greater flexibility, and immediate processing—without compromising your long-term financial goals.

If you’re looking for speed, convenience, and control, a personal loan from FIRSTmoney is the more practical choice.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirstbank.com for latest updates.

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