After the outbreak of COVID-19 pandemic, the consequent coronavirus lockdown has resulted in an acute financial crisis. For those holding a debt, concerns over loan repayment are inevitable as fears of unemployment and salary cuts remain overhead. As economic slowdown prolongs amidst and post the coronavirus lockdown, solutions to improve the condition of the financial sector will take time.
Besides, due to the COVID-19 pandemic, many are facing difficulty in paying off their EMIs; especially in the case of a personal loan that involves a high-risk factor, and for which, a repayment delay can impact the credit score severely.
Higher Default Possibility
The coronavirus lockdown has led to a surge in ratios of bad loans because of a rise in non-payment of personal loans. The COVID-19 pandemic is also responsible forseveral cuts in workforce and salary as multiple business sectors bear the brunt of the slowing economy. As a result, most borrowers are unable to pay the EMIs and likely to default. To avoid this, some debtors can opt for another personal loan to meet the necessary repayment needs.
Additional Read – Will My Personal Loan Eligibility Be Impacted During Lockdown?
Should You Worry About Your Personal Loan Repayment?
It all boils down to two things – your employment security and income in the wake of the coronavirus lockdown. If your source of income is steady, then repaying the EMI on your personal loan won’t be an issue. However, since the nature of COVID-19 pandemic is uncertain, if you are considering a deliberate non-payment of EMI to save funds or for other financial needs – you will be charged a late payment fee along with the interest amount.
On the contrary, for those unsure about their employment security or experiencing a job loss owing to the coronavirus, the personal loan repayment will become burdensome. In this situation, you can consider getting a new personal loan or a personal loan moratorium.
About Personal Loan Moratorium
According to the RBI announcement, borrowers with an existing loan as on 1st march – with at least one payment due – can seek an EMI moratorium up to august 31st, 2020. For three months after seeking the moratorium, no amount will be deducted from the borrower’s account, and this will not affect the borrower’s credit score.
Additional read – RBI Press Conference on Monetary Relief Measures in the Time of COVID-19
Moreover, the interest amount accumulated over the three months will be distributed among the future EMIs. Also, no late payment fee will be charged by the lender after the moratorium period is over.
Opt for a personal loan moratorium only if you are facing an acute cash crunch due to the coronavirus lockdown; otherwise, continue paying your EMIs regularly.
Following the coronavirus lockdown, solutions to improve the financial sector such as EMI moratorium, REPO rate cuts by the RBI, reduced interest rates, etc., have come as a saving grace. Especially for the self-employed and individual borrowers, these provisions will assist in bearing the financial crunch induced by the COVID-19 pandemic. Furthermore, if you’re facing severe difficulty in maintaining your financial health, a personal loan can be of great help. At Tata Capital, you can apply for a personal loan at competitive ROIs. Visit our website to learn more!