New Delhi: Even though the RBI recently allowed banks to provide a three-month moratorium on loans, only borrowers with genuine liquidity problems should opt for the facility, according to investment experts. The provision may allow deferment of the EMI payment due in March, April, and May, but interest will continue to accrue during this period.
The amount of interest is to be paid as a lump sum in June, the advisers said. “Only borrowers with genuine cash flow problems arising from a delay in wages or a cut in wages should opt for this relief measure. However, those with sufficient corpus in the next 3-4 months are recommended to pay Better. Why? They end up paying additional interest along with regular EMIs after three months, ” told Tax and Investment Advisor Jitendra Solanki, JS Financial Advisors
The RBI allowed the amortization schedule of such loans, as well as the residual term, to be moved three months after the moratorium period (March 1, 2020 and May 31, 2020). However, interest would continue to accrue on the outstanding portion of term loans during the moratorium period, RBI also said in a recent statement.
“People whose cash flows have been affected by the COVID-19 outbreak can use the option. But, if you have enough provisions with you, don’t do it. Or you can pay for a month and review the situation afterwards. Those who are unsure about the job or the cash flow prospects in the next two months can take advantage of this scheme, ” told independent financial adviser Harsh Roongta. Credit card, EMI and retail loan fees must be paid if borrowers are not experiencing financial difficulties, as interest will be calculated in a larger amount each month, the experts added.
Meanwhile, SBI explained the possible impact of the extension of the repayment period in a note on its official website that says:
Impact on the auto loan:
For a loan of Rs 6 lakh with a remaining maturity of 54 months, the additional interest to be paid would be Rs 19,000, almost equal to an additional 1.5 EMI.
Impact on the mortgage loan:
For a loan of Rs 30 lakh with a remaining maturity of 15 years, the net additional interest would be almost Rs 2.34 lakh equal to 8 EMI.