Have Loans To Service Or Availing It: FAQs On Moratorium Etc.

After the relief of moratorium has been extended or while you may be servicing different debts or might be planning to take one, given the low interest rate regime, here are some queries answered. Also, whether or not the borrower shall be better off in extemding the repayment or availing moratorium is also discussed.

1. Do loans such as gold loans and education loans also qualify for the moratorium grant?

Taking in view the current lockdown situation, where it is widely threatened that some of the companies amid the fall out due to Covid 19 may not honour service agreements and in turm those with liabilities to service EMI payments towards education loans may be left in a lurch.

To safeguard them while the government has been constantly nudging companies to honour their job offers, RBI's moratorium can also be availed. This is because education loans are also given as term loans where the repayment is done via EMIs.

Also, in a case where gold loan has to repaid through the EMI option, the moratorium facility can be availed on it too.

2. If after the recent repo rate reduction, my approved home loan will also be charged at lowered rate of interest?

Importantly, home loans are pegged to retail prime lending rate and if looking at the competition your bank also lowers the RPLR, you may get lowered interest rate on home loans. However, the steep 75 bps cut announced by the RBI on its key policy rate may or may not be transmitted by your banker.

3. There is an instance where in of the total home loan amount of Rs. 30 lakh for 20 years, Rs. 9 lakh is to be repaid with interest in 5 years. And so here in should I avail of the moratorium?

Ideally this should be the scenario when you might have pre-paid the loan amount and if you consider continue to pay out the EMI amount of Rs. 29000, taking current interest rate at 8.5%, and so your debt may be at best cleared in 36 months. And if we take into account interest on Rs. 9 lakh that for a 1-month period equates to Rs. 6400 and so repayment on loan will happen in 37 months.

Do personal loans come with an option of making prepayment after a period of one year?

Taking into account borrowers' credit score, some of the loans including personal loans can be pre-paid after one year period.

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