COVID-19 — PF Advance to Meet Loan EMI?
The COVID-19 Outbreak has literally put many people through worrying questions on financial stability. Many governments throughout the world have been actively announcing stimulus packages for their citizens to ensure people have money for their expenses.
I am intending to look at a few stimulus incentives issued by the Government of India through this article.
Loan Moratorium: This means “Repayment holiday”. For the period in which the moratorium is in effect, a person who has a loan EMI payment due can opt “not to pay”. This should help people have more money for their daily expense. But before you opt for the scheme, note that only the payments are put on hold; your loan would continue to accrue interest (In simple terms: You will have to pay higher interest at a later time).
So if your cash flow is not affected by the outbreak, don’t opt for the moratorium and settle your loans.
2. PF Advance for COVID-19: One can take an advance on the PF savings already with EPFO. Couple of questions you might have:
A. How much money can I draw? You can draw up to 3 months of gross pay or 75% of your EPFO balance.
B. How quickly can I get the fund? Once an application is successfully placed, one can expect credit of the fund in the linked bank account within10–15 working days.
Should you be drawing the PF balance? Ideally, don’t draw your PF balance unless necessary, as this a wonderful effort for your retirement benefits.
Are you facing cashflow trouble?
Are you thinking of availing Moratorium benefits?
This is where I want you all to consider the return that you get from PF investments which are close to 8.5%. When you avail a moratorium, you are going to be paying higher rates based on the loan/Credit card you use.
Once the crisis is over and you have the cash flow regularised, you can replenish the retirement benefits through Mutual funds, Bank Fixed deposits and so on.
