RBI extends EMI Moratorium for another 3 months. Should you avail?

RBI extended the EMI moratorium for another 3 months period (until August end). This means if you are failed to pay your EMI during this period, your bank will not take any legal action against you. And it will not affect your CIBIL score as well. Should you avail of EMI Moratorium?

First we need to understand the EMI moratorium. Though RBI announced it, the "terms and conditions" behind that will be decided by your bank. The initial misconception about EMI moratorium was your EMI for the period is waived off. Some of us even thought EMIs will be skipped for the period and it will be added at the end of tenure which is also wrong.

The truth is that you have to pay interest for this period. the interest accumulated during this period may increase your tenure along with the no of months you availed moratorium.

Let us consider an example of a person* who took a loan of 5 lakhs for 11% interest with 60 months as tenure. His monthly EMI is ₹10871 and he paid EMIs for 5 months so far. He availed the EMI moratorium for 2 months when he was supposed to pay the 6th month due.

Post moratorium period, his loan tenure will be increased from 60 to 63.3 months (approx). because the interest accumulated for the 2 months (₹8500 approx) will be added to the outstanding principal (after 5th EMI).So he would be ended up paying more money to the bank comparing to the normal scenario.

If you are really running out of the money and not certain about the future then you can avail of the EMI moratorium. But if you can manage the situation and still thinking about availing EMI moratorium then think twice about the extra money you are going to lose at the end.



*The calculations may differ based on your bank's terms and conditions.

Medical Insurance - Need of the hour

Most of us used to think that life insurance policies are good enough considering the cost and term of medical insurance policies. And even some of us used to think that spending money on the medical insurance policy is not useful as we don't claim it for every year or never claimed so far.

But due to the coronavirus outbreak, the importance of taking a medical insurance policy has increased much not only for you but for your family members as well.

Nowadays the hospitalization and medicine expenses are on the higher side and there is a lot of chance that you may get impacted financially due to the recession caused by coronavirus outbreak. So you may find it difficult when a sudden need for money arises due to medical expenses.

If you are a person working in a company which has group insurance then it would be fine otherwise you need to go for one.

If you find it difficult to buy a good medical insurance policy cover, at least buy any basic policy package covering critical illnesses offered by major insurance companies. When you buy a medical insurance policy try to cover all the members of your family including children and elders.