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Calculate how opting for a loan moratorium affects your total interest cost and loan tenure.
Total cost of opting for moratorium
If EMI is kept the same
Interest added to principal
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.
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.
Interest continues to accrue on your outstanding principal during the moratorium period.
The accrued interest is added back to your principal, meaning you will pay interest on this interest in the future.
If you have a loan of ₹25 Lakhs at 8.5% interest and opt for a 6-month moratorium:
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.
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.
It depends on the lender and the specific scheme. Usually, it's offered for Home Loans, Personal Loans, and Education Loans during systemic crises.
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.