What is Moratorium Period in Personal Loan and How It Works?

What You Need to Know About the Moratorium Period in Personal Loans?

A moratorium on loans allows borrowers to stop making their loan payments. During this period, they are not under any obligation to make payments towards their loan, but the interest will continue to accrue. However, it's important to note that the moratorium period only applies to selected loan products. So, borrowers should check with us to confirm if their loan is eligible for it.

Notably, the Reserve Bank of India (RBI) announced a moratorium period under the COVID-19 regulatory package, allowing borrowers to defer their loan EMIs. This loan moratorium period was initially available for three months, from March 1, 2020, to May 31, 2020, and was extended for an additional three months until August 31, 2020. However, the moratorium period has now expired.

So as you can see, the moratorium on loans is available on a case-to-case basis.

Read More: What is the Minimum Salary for Personal Loans

How to Make the Most of the Moratorium Period in Personal Loans?

If you are experiencing financial difficulties and are unable to make your Personal Loan payments, the moratorium period can be a valuable option to consider. This period allows you to postpone your loan payments for a specified duration without incurring late fees or penalties. It gives you the flexibility to manage your finances more effectively. By taking advantage of this, you can ease the burden of your financial obligations and focus on getting back on track without worrying about the applicable late fees.

A moratorium period can be helpful if you face temporary financial hardship or unexpected expenses. However, interest will continue to accrue during this period, so the total loan payment may slightly differ from the initial estimation.

To make the most of the moratorium period, you can use it to build an emergency fund by setting aside a portion of your monthly income. Building up a safety net to cover unexpected expenses such as medical bills, car repairs, or home emergencies can help you avoid additional debt and be better prepared for any financial setbacks.

Another way to make the most of the moratorium period is to use it to pay off other high-interest debts, such as credit card debt. By directing your funds towards paying off high-interest debt, you can save money in the long run and improve your credit score. So it's essential to stay in touch with your lender and communicate any changes in your financial situation that may affect your ability to repay the loan. Doing so can avoid negative impacts on your credit score and maintain a good relationship.

Frequently Asked Questions about Personal Loans Moratorium Periods

• What is a Moratorium Period in a Personal Loan?

  The Moratorium Period is when borrowers can postpone their loan payments without penalties or late fees. It is a valuable opportunity for individuals facing financial difficulties and needing time to get back on their feet.

• How long is the Moratorium Period for a Personal Loan?

  The duration of the moratorium period for a Personal Loan may vary depending on the specific terms and conditions set by the lending institution. Typically, this period ranges from three to six months.

• Can I make partial payments during the Moratorium Period?

  Sometimes partial payments are allowed during the moratorium period, but checking with the lender for any restrictions or limitations is advisable. This can help avoid penalties or late fees and ensure timely payments.

• Does interest accrue during the Moratorium Period of a Personal Loan?

  Yes, interest accrues during the Moratorium Period of a Personal Loan. This means the borrower will pay the accrued interest and the loan amount once the Moratorium Period ends.

We hope this article was helpful for you in understanding what a Personal Loan Moratorium Period is and how it works. Whether you seek Personal Loan finance online or offline, you should ensure you borrow wisely and pay responsibility. Remember, a moratorium on a loan is an extreme condition and varies from case to case.