Moratorium means that the borrower is not required to pay the monthly installment during this period. This may ease loan holders facing cash crisis. The Reserve Bank has asked companies with credit information to ensure that not paying installments does not affect the credit score of the lender.
Now, in simple words, Moratorium is the period during which you do not have to pay EMI on the loan taken. This period is also known as EMI holiday. However, this is the only option to avoid EMI. It is not that these 6 installments will be given less than your EMI.
The Reserve Bank has asked companies with credit information to ensure that not paying installments does not affect the credit score of the borrower.
Arrears on personal loans and credit cards are not within the scope of the moratorium. However, the loan taken to buy consumer goods will be under its purview. This facility can be availed on car loan and home loans. Although the Moratorium may not be for everyone, banks can now bring qualifications and terms on it.
The moratorium means that fines will not be recovered and will not negatively impact credit history. But the interest of the Moratorium period will be added to the principal. After this period is over, you will also have to pay the pending interest. That means you have to pay some more interest than before. Therefore, even if you have the facility of Moratorium, you should choose this option only if you lack liquidity. If you have enough money then you have the advantage in paying installment only.