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Personal Loan vs EPFO – Which Should You Use for Marriage Expenses?

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Highlights

  • Shall you plan your wedding with a personal loan or EPF savings?
  • Read this post that tells you the option to go with

Marriage is the most anticipated moment in your life. And to make this auspicious occasion special, you may require funds if you do not have the required hard cash with you. You cannot estimate the exact cost of a wedding with the fluctuating rates. However, despite the high cost, if you want to make your wedding a perfect day for yourself and your family, there are better financial options available for you. Yes, you can either borrow a personal loan or withdraw funds from your Employee Provident Fund (EPF). Which suits your marriage expenses better, let’s know the same in the post below.

How to Use EPF for Marriage Expenses?

Employee Provident Fund Organisation (EPFO) provides retirement funds to the salaried applicants. But you can withdraw from this even when you are working. 12% of your basic salary is contributed to your EPF account every month which you can withdraw for marriage. A maximum of up to 50% of your EPF account balance can be withdrawn for marriage. And you should have completed your contribution to EPF for at least 7 years if you want funds for your wedding expenses.

Pros

  • There is no burden of interest rate
  • Get additional help from your retirement corpus
  • No need to worry about money borrowing
  • Easy to withdraw
  • You withdraw money for marriage up to three times

Cons

  • Your retirement fund is compromised to an extent for the wedding expenses
  • If you withdraw before 5 years of your contribution, your balance amount is taxable.
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Documents for EPF withdrawal

  • Form 19
  • Form 10C
  • Form 10D
  • And Form 31
  • Latest bank account statement
  • ID proof such as Aadhaar card, PAN card, Voter ID, passport, or driving license
  • Address proof for example electricity bill or telephone bill.
  • A cancelled cheque

EPF Withdrawal for Wedding Expenses

  • Visit the official EPFO website
  • Login with your UAN number and Password
  • Select ‘Online Services’ from the above menu tab and select ‘Claim (Form-31, 19 & 10C)’
  • Your account details will be displayed on the screen.
  • Enter the last 4 digits of your bank account and click on the ‘Verify‘ button
  • Click on ‘Yes’ and proceed further
  • Select ‘PF Advance (Form 31)’ for funds withdrawal
  • A form will open where you have to select the purpose for the withdrawal
  • After that, submit your application
  • You should submit scanned documents such as a wedding card, depending on the purpose for which you have filled the form
  • Your employer then approves your withdrawal request after which the money will be withdrawn from your EPF account and deposited in the linked bank account

Once the claim is processed, you’ll receive an SMS on your registered mobile. The funds are credited within 15-20 days.

Personal Loan for Wedding Expenses

It is an option available to every individual who is either self-employed or salaried. If you have started your job 2 to 3 years back, there may not be enough savings in your EPF account. In that case, what should you do? Then you can apply for a personal loan. What is a personal loan? It is an unsecured loan that can be granted depending on your income and credit history. It is a flexible option for the customers who need instant funds for their financial emergency such as marriage.

Pros

  • Instant loan disbursal
  • High loan amount
  • Flexible tenure for repayment
  • Part and prepayment facility

Cons

  • High interest rate range form 10.75%-21.00%
  • Penalty interest of 2% per EMI default
  • Fixed payments
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Where Should You Apply for a Personal Loan to Meet Wedding Expenses?

To get a personal loan for a marriage, you can contact a bank or financial institution. And here we show you some of the top lenders for personal loans in India. Check out the table below.

Bank or NBFCMaximum Loan AmountPersonal Loan Interest RatesProcessing fee
HDFC BankDepend on the income and credit score of the applicant10.75% - 21.30%NIL - 2.50% of the loan amount plus applicable GST
ICICI BankINR 40 lakh10.75% - 17.50%INR 1,999 - 2.25% of the loan amount GST
IDFC First BankINR 25 lakh10.99% - 22.00%2.00% - 2.50% of the loan amount
YES BANKINR 20 lakh10.45% OnwardsUp to 2.50% of the loan amount subject to a minimum of INR 999 + taxes
IndusInd BankINR 15 lakh11.00% Onwards1% - 3% of the loan amount + GST
RBL BankINR 20 lakh17.50% - 26.00%2% - 2.5% of the loan amount
Kotak Mahindra BankINR 20 lakh10.75% - 17.99%0.99% - 2.25% of the loan amount + GST
Fullerton IndiaINR 20 lakh14.00% - 24.00%0% - 6.00% of the loan amount
Bajaj FinservINR 20 lakh10.99% - 16.00%Up to 3% of the loan amount
Tata CapitalINR 25 lakh10.99% - 18.00%INR 999 - 2.50% of the loan amount
State Bank of India (SBI)INR 15 lakh9.60% - 13.60%Nil - 1% of the Loan Amount + GST
Bank of BarodaINR 10 lakh10.10% - 15.20%2% of the loan amount
Minimum: INR 1,000
Maximum: INR 10,000
Canara Bank6X gross monthly income10.20% - 13.90%0.5% of the loan amount + GST
Standard Chartered BankINR 30 lakh11.00% - 15.00%2.00% - 2.50% of the loan amount + GST
Axis BankINR 15 lakh12.00% - 24.00%1.50% to 2.00% of the loan amount + GST

Documents for a Personal Loan

You need to submit the following documents if you want to borrow a personal loan from a bank or an NBFC for your wedding expenses.

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ID Proof:

  • Aadhaar Card
  • PAN Card
  • Voter ID Card
  • Passport
  • Driving Licence

Address Proof:

  • Telephone Bill
  • Electricity Bill
  • Aadhaar Card
  • Passport

Income Proof:

  • Salary slip
  • Bank statement
  • Salary certificate
  • ITR report
  • TDS certificate
  • Form 16

How to Apply for a Personal Loan?

To apply for a loan for your wedding expenses, you can visit the bank branch or go to its official website. As there are online application services available for the customers nowadays. So know about both the online and offline process for the personal loan.

Apply Personal Loan @ 10.75%* Rate

Offline

  • Visit your bank branch
  • Ask for a personal loan from the bank representative
  • He/she will hand out an application form to you
  • Fill up the form and submit it along with the necessary documents
  • Wait for the approval

Online

  • Go to the official website
  • Fill up the online form
  • Upload your ID and income details
  • Wait for the approval from the lender

You will get a notification on your registered mobile or email address if your personal loan is approved. And the loan will be disbursed to your account within 7 days after the deduction of processing fee.

Conclusion

Above, you saw the features of both personal loans and employees provident funds, which can be used for wedding expenses. If you have a reasonably good balance in your EPF account, you can use around 20-30% of it and leave the rest to accumulate further. If that is sufficient for wedding expenses, you don’t need to take a personal loan. This way, you can prevent an interest burden on you. In case the EPF balance is not sufficient, you can apply for a personal loan to cover the shortfall. This way, you can reduce the interest burden compared to when you go solely with a personal loan.

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Personal Loan Interest Rates November 2020
Fullerton India14.00% - 24.00%
HDFC Bank10.75% - 21.45%
ICICI Bank10.75% - 17.50%
IndusInd Bank11.00% - 23.00%
Kotak Bank10.99% - 20.99%
RBL17.50% - 26.00%
Standard Chartered Bank11.00% - 15.00%
Tata Capital10.99% - 19.75%
Home Loan Interest Rates November 2020
Axis Bank7.75% - 8.55%
Bank of Baroda6.85% - 8.25%
Citibank7.13% - 8.03%
HDFC6.90% - 7.65%
ICICI Bank6.90% - 8.05%
Indiabulls Housing Finance Limited8.99%
Kotak Bank6.75% - 8.45%
LIC Housing6.90% - 7.90%
Piramal Capital & Housing Finance9.65%
PNB Housing Finance7.50% - 9.20%
Reliance Home Finance8.75% - 14.00%
State Bank of India/SBI6.95% - 7.60%
Tata Capital7.50% - 8.75%