Moratorium Period in
Personal Loan Explained

On availing a personal loan, one is required to honour the EMIs right through the tenure of the loan. A moratorium period is the duration of the loan tenure during which you are not obligated to repay the loan. It is a short holiday during the repayment tenure post which you will have to commence payments. However, opting for a moratorium will extend the tenure of the loan and will accrue interest on the principal outstanding amount. This period is intended to help the customer gain greater financial dependence.

What is a Moratorium on Personal Loans?

The Reserve Bank of India has made an announcement permitting financial institutions to offer a 6- month moratorium on personal loans as well as all other term loans and credit card dues. Due to the COVID-19 lockdown, several people across the country have had to face hardships due to job loss, pay cuts, loss of income (for self-employed people and businessmen), and so on. Thus, if you are under severe financial distress and are unable to adjust your monthly budgets to be able to pay your loan EMIs, you can choose to opt for the moratorium facility. Please note that if you would like to avail of this facility, you will need to apply for the same on our website. Also, for a moratorium between Jun - Aug 2020; you can only apply one month at a time.

How will Interest be Calculated on My Loan during the Moratorium Period?

Simple interest is calculated on the principal amount outstanding for the relevant period. Upon the completion of this period, a new schedule will be drawn up based on the total principal amount outstanding, and your EMI or tenure (or both) will change accordingly.

What are the Advantages of Opting for a Moratorium in a Personal Loan?

A moratorium period can help you weather through financially difficult times caused due to a loss/uncertainty of income by preventing cash outflow. However, consider this option only in case of severe financial distress since the interest accrued will cause the total outstanding amount to increase post the completion of the moratorium period, and the overall interest payable over the loan tenure will increase significantly.

What Does the Moratorium Consist Of?

The moratorium includes the principal amount as well as interest.

Do I Have the Option of Honouring the Interest Payments During the Moratorium Period?

In case repaying the loan during this period does not hurt your financial health, we strongly recommend that you continue to pay your EMIs as per the original schedule. Alternatively, you can contact your lender and try to negotiate more favorable repayment terms so that your monthly EMI is something you can manage easily. However, if you choose to avail of the moratorium facility, you will not have to pay anything for the specified period.

Can I Avail of a Moratorium Even If My Loan is Not Fully Disbursed?

Yes, you are eligible to apply for a moratorium even if your loan is not completely disbursed.

In case you are unsure about which option to opt for or are considering opting for a moratorium, you can check our moratorium EMI calculator page to get a clear estimate of how the moratorium would affect your loan. You can also read up on the process and eligibility criteria for the same, to make an informed decision. Regardless of which option you opt for, you can be assured of only the best service throughout the repayment tenure.

If you are not an existing customer but wish to make a personal loan balance transfer or check your eligibility for a personal loan, apply now or get in touch with a customer care executive.

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