EPFO: Withdrawing Rs 5 lakh from EPFO account or taking a personal loan, which has less loss?
If you suddenly need Rs 5 lakh, then you have the option of taking a personal loan and withdrawing money from an EPFO account, but both of these offer high interest. If you make a slight mistake, you can lose lakhs.
When you withdraw PF, it takes 3 to 10 days for the money to come into your account, whereas in today's era, personal loans are available within hours and there is no need to visit the bank for this.
Currently, the government is providing 8.25 percent tax-free compounded interest on PF accounts, which is considered a better option for saving for a long time. If you withdraw Rs 5 lakh from your PF account, then you lose the interest of Rs 2.45 lakh that you would have received in 5 years. However, on withdrawing money from PF, you will not have to bear the burden of EMI or loan.
If you take a personal loan of Rs 5 lakh, then you will have to pay 13 percent annual interest on it. To repay this loan in 5 years, you will have to pay an EMI of Rs 11,400 every month, due to which you will have to pay a total of Rs 6 lakh 84 thousand in 5 years.
If you need Rs 5 lakh and you are not worried about retirement funds, then withdrawing money from your PF account can be a better option, because this will not bother you with EMI and secondly you will not have to spend Rs 1.84 lakh extra.
If you are going to need money after retirement, then you should not withdraw money from your PF account. Along with this, if you need Rs 5 lakh, you should take a personal loan reduce your expenses, and pay EMI on time.
(Note- Here we are giving you only information. If you want more detailed information, then you must consult your finance advisor.)
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