Is EPF advance better than a Personal Loan?

4 MinsFeb 1, 2023

The Employees' Provident Fund (EPF) scheme allows salaried employees to accumulate a retirement corpus over their active working life. The corpus is made available post-retirement or if the employee remains unemployed for up to two months.

Is EPF advance better than a Personal Loan?

The EPF scheme also allows partial withdrawals if you need funds for any obligation. Also called the EPF advance, these withdrawals put a dent in your retirement corpus. Other restrictions of the EPF advance are as follows -

  • It is available only for specific uses like marriage, education, home purchase or renovation, medical emergency, etc.
  • The quantum of the advance is limited.
  • Except in the case of medical emergencies, the advance is available after a specified tenure.

Given these restrictions, a personal loan proves to be a better alternative than an EPF advance. Here are the reasons why -

  • Easy availability
  • Personal loans are quite readily available. Most banks and Non-Banking Finance Companies (NBFCs) offer attractive personal loans for your financial needs. You can apply for the loan via online or offline channels and get the funds within a few minutes or a few days.

  • Multipurpose and collateral-free
  • Compared to an EPF advance, personal loans are multipurpose loans. You can get a loan for any financial need - personal or commercial. So, a personal loan is available easily, whether for a medical emergency or a trip.

    A personal loan is available without collateral. You don't need to pledge any asset and can avail of the funds with simple eligibility parameters.

    [Also Read: Choose a personal loan interest rate that fits your pocket]

  • High loan quantum
  • The quantum of EPF advance might not be sufficient for your needs. Personal Loans allow higher loan amounts that prove sufficient to fulfil every type of financial need.

    For instance, an Axis Bank Personal Loan finance amounts up to ₹ 40 lakhs. You can avail of easy finance from Axis Bank and get the desired funds to meet your obligations.

  • Easy repayment
  • Repaying a personal loan is quite simple. You can repay the loan and the interest rate through affordable Equated Monthly Instalments (EMIs). Lenders allow flexible repayment tenures that allow you to repay the loan without burning a hole in your pocket. For instance, Axis Bank personal loans offer a repayment tenure of up to 60 months, over which you can repay the loan in affordable EMIs.

  • Safeguards the investment corpus
  • The EPF scheme is designed to create a retirement corpus for the individual's “golden years”. Though it allows an advance during the scheme's tenure, the EPF balance falls if you make a withdrawal. This hampers the retirement corpus and might deplete it considerably.

    A personal loan, on the other hand, protects the invested corpus. Through personal loans, investments remain safe and the loan takes care of your financial needs.

Is EPF advance better than a personal loan?

  • Gives the desired funds
  • Has no additional conditions
  • Is easily available whenever needed

You do not have to follow any rules with personal loans, as compared to EPF advance withdrawals. So, when there's a requirement of funds, a personal loan can come in handy. It safeguards the EPF corpus and gives the funds needed for your financial needs.

Still unsure about eligibility? Check the Personal Loan Eligibility criteria at Axis Bank's intuitive website.

Want to calculate the monthly EMI on a personal loan? Check out Axis Bank's interactive Personal Loan EMI calculator & Interest Rates On Personal Loan

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author 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. Please consult your financial advisor before making any financial decision.