RBI’s 3 months’ moratorium on loans and what it means for you as a customer
POSTED ON APRIL 04, 2020 BY CREDITMONITOR
So here’s the COVID-19 regulatory package laid out by RBI on 27th Mar 2020, and what it means for customers having a payment due.
The period of this moratorium is from 1st March 2020 to 31st May 2020, which means that if your bank gives you this option your payment due dates falling in this period only would be deferred.
Also the interest will continue to accrue, meaning if you chose to defer your payments you will end up paying 3 months of additional interest on your loan than you normally would have paid. So if you can make your payments, it’s advisable to make the payments than to defer them.
However, if you chose to defer your payments, your credit score will not be impacted, neither will your account be termed as non-performing asset.
Each of the banks and NBFCs have a choice to provide this to their customers in totality or segregate it by customer type and or loan type, which means even if you receive a message from your bank that you can opt for this moratorium, you are requested to check their message in total and see if your loan qualifies for this.
Now if you are still thinking, I’ll go ahead with the impact, as I can use this amount for an emergency now, then we urge you to think again. First, check on the tenure of your loan, because the longer the remaining tenure the bigger the impact. Second, check which type of loan are you considering placing it on moratorium, because by the time you opt for it, it would mean 2 months you are being able to defer, and if unable to pay in March, then you have 3 months of interest getting accumulated, but is that all? No! For an auto loan of 5 years’ tenure taken at the beginning of this year, you may have to pay an additional 2 months of EMI, that will be the impact and id it’s a home loan of 10 years remaining tenure, the additional burden may be anywhere between 5-7 EMI’s.
Now that the impact is known to you, it should seem wiser to continue to make your payments on time, rather than opt for this moratorium.
And if you don’t have an auto debit or ECS instruction on your loan payment, you can head over to our payments page and no matter which bank or which loan you have, we have got you covered, with a few clicks your payment is done, and you can breathe a sigh of relief. No more additional interest to be paid.