People cannot generally increase their capital through compensation; they can only fulfill their obligations and necessities. Individuals take loans for housing, vehicles, and other important needs.
Due to this, they have completed their work and are paying off their debt through EMIs. But occasionally, due to a loss of employment or for some other cause, it becomes challenging to make the loan payments.
If the loan's EMI is not paid for three months, the bank may also put the borrower in default; in this scenario, his CIBIL score is impacted, making it difficult for him to get credit in the future. Therefore, a loan Moratorium may be beneficial to you in this case. In addition, you can request the bank for additional time to pay the installment through a loan moratorium. Learn about loan moratoriums in this article and how they might be helpful to you.
What is a Loan Moratorium?
You must apply for a loan moratorium at the bank. If you have a good reason, the bank may grant you a short period through a loan moratorium. In this, the person does not have to pay the installments for a certain period. The person who is having financial difficulties will feel great relief from this.
Interest has to be paid even during the grace period.
You will undoubtedly have more time to pay your installment via a loan moratorium, but neither your EMI nor the interest charged will be canceled. You must pay the interest accrued on the loan when excused from making payments. Compared to the total EMI of the loan, the amount of interest alone is extremely small.
Benefits of the Loan Moratorium
Many people believe the loan moratorium is useless if interest must be paid. The benefit is that you must pay the penalty and interest if you regularly skip an EMI. Your CIBIL score is also poor addition to all of this. But, the bank allows you to stop the EMI for a while with the loan moratorium. Your CIBIL score is unaffected in this situation.
Who can apply for a loan moratorium?
Regarding who may apply for a loan moratorium, the answer is that either a firm or an individual may do so. If your reason is valid, you can ask the bank for a moratorium on a home loan, vehicle loan, credit card repayment, etc.