When the economic crisis suddenly knocks – whether it is due to leaving the job or due to a serious illness – then the biggest concern is every month’s installment i.e. filling EMI. In such a situation, Loan Moratorium comes as a temporary relief. This allows you to stop paying EMI for a few months, so that you can handle your financial situation. But keep in mind, this is not any kind of free discount, but just a chance to extend the date of filling the installment. And yes, interest keeps increasing during this time.
What is loan moratorium?
In simple language, Lone Moretorium is a pose button, not a stop button. Banks or financial institutions allow your EMI payment to stop for some time, if you are struggling with sudden difficulties.
During this time your liability is not forgiven, just the installment date is postponed.
The interest of interest is continuously moving and later it is added to the total amount of your loan.
Not discount, just postponement
The biggest misunderstanding here is that Moaretorium means to be forgiven the loan – it is not so.
Relief for short time: You will not have to give EMI for a few months, which reduces immediate economic pressure.
Long time burden is fixed: Later your EMI amount will increase or loan time will increase. In both circumstances, you will have to pay more overall.
Who can take the loan moratorium?
Not everyone can take advantage of it directly. Banks or NBFCs give it only to select customers, that too when they present the appropriate reason and documents.
Your loan account should be standard (usually not in the outstanding position of more than 90 days).
You have to apply and prove the reason – such as a job missing letter, hospital bill, or salary slip.
The approval of every case depends on the discretion of the bank.
EMI Moratorium taking process
If you want a temporary discount in EMI, take this step:
Contact your bank: Explain your situation honestly.
Submit the document: Provide evidence of missing job, illness or income reduction.
Understand the conditions: Interest will be charged or not, how much EMI will increase, how much will be the loan period – take all this in writing.
Make smart conversation: If possible, reduce EMI or increase the loan period.
Learn the effect on the credit score: The score in some moretorium does not affect, but in some cases may occur.
Once the approval is received, the bank will send you a new EMI schedule.
Benefits of Moretorium
Immediate relief in financial difficulty
Avoidance of late fees or defaulters
Helpful in emergency situations (eg disease, job missing, reduction in income)
Disadvantage
Interest will continue to increase continuously
EMI may increase or the loan duration may be longer
The burden of interest in large loans (such as home loans) can increase a lot
Credit card limit may be reduced in some cases
Should you take EMI Moratorium?
It is necessary to take this decision thoughtfully.
If you can fill EMI: Keep filling, because it will not put an additional burden of interest.
If there is compulsion: then choose the option of Moretorium.
Warning for home loans: In the early years of the loan, a large part of EMI goes into interest, so taking a moratorium can increase the cost of the loan further.
Loan EMI Moratorium is a kind of emergency bridge, which helps you to overcome difficult times. But the conditions are attached to it and in a long time it can prove to be an expensive deal. So before deciding:
Talk to the bank in detail
Account to total interest and EMI change
Assess the impact on your credit score
Economic relief is necessary, but it is not prudent to bear heavy burden in future just for short -term comfort. Only the correct calculation and thought-taking decision can give you real financial security.
