Personal Loan vs EPFO – Which Should You Use for Marriage Expenses?
Last Updated : Aug. 3, 2020, 3:01 p.m.
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 A maximum of up to 50% of your EPF account balance can be withdrawn for marriage.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.
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
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 NBFC | Maximum Loan Amount | Personal Loan Interest Rates | Processing fee |
|---|---|---|---|
| HDFC Bank | Depend on the income and credit score of the applicant | 10.75% - 14.50% | NIL - 2.50% of the loan amount plus applicable GST |
| ICICI Bank | INR 40 lakh | 10.75% - 19.00% | INR 1,999 - 2.25% of the loan amount GST |
| IDFC First Bank | INR 25 lakh | 10.50% - 25% | 2.00% - 2.50% of the loan amount |
| YES BANK | INR 20 lakh | 11.05% - 20.25% | Up to 2.50% of the loan amount subject to a minimum of INR 999 + taxes |
| IndusInd Bank | INR 15 lakh | 10.25% - 26.00% | 1% - 3% of the loan amount + GST |
| RBL Bank | INR 20 lakh | 14.00% - 23.00% | 2% - 2.5% of the loan amount |
| Kotak Mahindra Bank | INR 20 lakh | 10.99% Onwards | 0.99% - 2.25% of the loan amount + GST |
| SMFG India Credit | INR 20 lakh | 11.99% Onwards | 0% - 6.00% of the loan amount |
| Bajaj Finserv | INR 20 lakh | 11.00% Onwards | Up to 3% of the loan amount |
| Tata Capital | INR 25 lakh | 10.50% - 24.00% | INR 999 - 2.50% of the loan amount |
| State Bank of India (SBI) | INR 15 lakh | 11.00% - 14.00% | Nil - 1% of the Loan Amount + GST |
| Bank of Baroda | INR 10 lakh | 10.90% - 18.25% | 2% of the loan amount Minimum: INR 1,000 Maximum: INR 10,000 |
| Canara Bank | 6X gross monthly income | 11.75% - 16.25% | 0.5% of the loan amount + GST |
| Standard Chartered Bank | INR 30 lakh | 11.49% Onwards | 2.00% - 2.50% of the loan amount + GST |
| Axis Bank | INR 15 lakh | 10.49% - 21.00% | 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.
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.