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Personal Loan

What is a moratorium period

Key Takeaways

  • The moratorium period allows borrowers to temporarily pause their EMIs without becoming a loan defaulter.
  • Interest is accrued throughout the moratorium, thus increasing the overall loan cost.
  • Lenders offer moratoriums for education, home, and personal loans in certain circumstances.
21 May 2025 by Team FinFIRST
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A moratorium period is a temporary suspension of loan repayment offered by a lender. It relieves the borrowers by enabling them to have a temporary pause in their EMIs without being termed as defaulters. Even though flexibility is allowed, the interest continues to accumulate, and thus, the loan becomes more expensive.

What is a moratorium period?
 

A moratorium period is a grace period when a borrower does not have to repay the loan. It is generally offered for:

· Educational Loans:
 

Borrowers are offered a moratorium until they become employed.

· Home Loans:
 

Few lenders offer an initial moratorium after buying property.

· Personal Loans and Business Loans:
 

Offered in exceptional circumstances like business crisis.

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How does a moratorium period work?
 

The moratorium does not neglect interest but only postpones EMI payments. Here is how it happens:

  • The lender agrees on a moratorium duration depending on the type of the loan.
  • Borrowers do not pay EMI for the approved duration.
  • Interest continues to accrue on the outstanding loan.

Pros and cons of a moratorium period
 

Let us learn about the pros and cons of a moratorium period.

Pros:
 

  • Helps borrowers in managing finances during short-term difficulties.
  • Prevents late payment charges and negative impact on credit score.
  • Offered in education, housing, and personal loans.

Cons:
 

  • Unpaid interest adds to the total cost of the loan.
  • EMI repayment can be higher post-moratorium.
  • Dependent on lender’s approval.

How to apply for a moratorium on a loan?
 

The following steps will help you apply for a moratorium.

  • Check whether your loan can be put under a moratorium.
  • Apply through the lender’s website, customer service, or branch.
  • Proof of income or financial hardship needs to be submitted.
  • The lender views the request before issuing a moratorium.

A moratorium isn’t a waiver – it’s a pause. Knowing its effect keeps you on top of your finances.

Why FIRSTmoney is your best partner for financial assistance
 

If you are thinking about applying for a Personal Loan, FIRSTmoney provides a hassle-free borrowing experience with easy repayment terms and competitive interest rates of 10.99% p.a. With a 100% digital application process, quick approvals, and no foreclosure fees, you can get funds easily while keeping your finances flexible. From paying loan EMIs to taking care of sudden expenses, FIRSTmoney provides a transparent and hassle-free experience. You can avail loan amounts ranging from ₹ 50,000 to ₹ 10 lakhs with flexible repayment terms spanning 9 to 60 months. You can get multiple on demand loans starting from ₹ 10,000.

Conclusion
 

A moratorium period may provide relief but at a greater expense as the interest amount increases. Borrowers should carefully evaluate their repayment ability before opting for one. If you are searching for a smart personal loan with easy repayment terms and transparent policies, FIRSTmoney offers competitive terms and convenient loan management options.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirstbank.com for latest updates.

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