Moratorium Impact Calculator
Calculate how opting for a loan moratorium affects your total interest cost and loan tenure.
Loan Details
Total cost of opting for moratorium
If EMI is kept the same
Interest added to principal
Cost Comparison
Post-Moratorium Options
Note: During moratorium, interest is not waived. It is added to your principal (capitalized), which leads to interest being charged on interest in the future.
Smart Insights
- Severe cash flow crunch or job loss.
- Medical emergencies requiring immediate funds.
- Interest capitalization significantly increases total cost.
- Extends your debt-free date by several months.
Understanding Loan Moratorium
A loan moratorium is a temporary period during which you are not required to pay your loan EMIs. While it provides immediate relief during financial distress, it is important to understand that it is not a waiver.
1Interest Accrual
Interest continues to accrue on your outstanding principal during the moratorium period.
2Capitalization
The accrued interest is added back to your principal, meaning you will pay interest on this interest in the future.
The Mathematical Impact
If you have a loan of ₹25 Lakhs at 8.5% interest and opt for a 6-month moratorium:
- ₹1.08 Lakhs of interest will be added to your principal.
- Your loan tenure could increase by 15-18 months.
- Total interest cost increases significantly.
Frequently Asked Questions
Does moratorium affect my credit score?
Generally, no. If the moratorium is offered by the bank and you opt for it, it is not reported as a default to credit bureaus. However, always check with your specific lender.
Can I pay interest during the moratorium?
Yes, some banks allow you to pay only the interest component during the moratorium. This prevents interest capitalization and is a much better financial choice if you can afford it.
Is moratorium available for all types of loans?
It depends on the lender and the specific scheme. Usually, it's offered for Home Loans, Personal Loans, and Education Loans during systemic crises.
Should I opt for moratorium if I have the funds?
No. If you have the funds, you should continue paying your EMIs. Opting for moratorium when not needed will unnecessarily increase your total interest burden.