RBI recently issued a 3-month moratorium on all Term Loans in the wake of COVID-19. It is applicable to all Term Loans in all segments. An aid for the financially poor who are hit badly by the pandemic. The right to choose or ignore the moratorium lies with the bank. Hence, the borrower has to notify the bank to get the benefit. On the bright side, choosing moratorium will not affect the borrower’s credit score. However, the three-month moratorium is not a waiver. Those who avail it will have to bear higher cost once it ends. The interest due will be added to the principal. One will have to pay interest on a bigger principal in the remaining years. Choose moratorium only if you are in a deep financial crunch. Continue paying the payments if you can afford. Credit cardholders are also advised to clear dues if possible. The interest of these 3 months will not reflect while calculating tax next year. In a nutshell, make your calculations before choosing moratorium.
