Monday, March 30, 2020

EMI HOLIDAY BY RBI – BEWARE - YOU COULD GET TRAPPED !

RBI’S MORATORIUM ON EMI COULD LEAD YOU INTO A TRAP
Greetings,
The CORONA Pandemic impact has forced RBI to step in to offer relief to borrowers who obviously are facing huge Liquidity crunch.
RBI has ALLOWED Banks and Financial Institutions to provide a moratorium of 3 months to all TERM LOAN Borrowers.
RBI has clarified that the Credit Score of the borrowers will not get impacted due to Moratorium.
Dont be under the false assumption that pausing your HOME LOAN EMI for 3 months will mean that your LOAN TENURE will also get extended by 3 months. 
As shown in the image, it can get extended by as much as 10 months!
A huge price for the comfort of 3 months. 


Lets get more details

  1. IS THIS A WAIVER OF LOAN?
No…This is not a waiver of Loan…its just a sort of EMI HOLIDAY.
Please understand, Moratorium means DEFERMENT. So, suppose your loan was supposed to end in June 2021, it will now end in September 2021 (3 months postponement).

  • Will my CREDIT CARD dues be deferred?
    Yes. That can be deferred. But, don’t forget the INTEREST!
    You will be charged interest for the 3 months and you do know the Interest that Credit card companies charge !!!!
  • My EMI gets deducted by ECS every month…. So in April will there be no deduction ?
    There could be!!!!
    Note….RBI has not “Instructed” but only “Allowed” the Banks to give this 3 month EMI Holiday. It’s up to the Bank to give or not..
    Hence you need to request the bank for the deferment
  • Is my HOME LOAN covered for deferment?
    Yes. All types of Term Loans are covered for deferment.
    Home Loan, Education Loan, Car Loan, even BUSINESS LOAN is covered.
    But, make sure to contact your Bank and request for deferment
  • My loan is not with any Bank but with a NBFC. Am I eligible?
    Yes. Indeed, you are. RBI has very clearly mentioned that it has ALLOWED all Banks and Financial Institutions to grant EMI Holiday based on their discretion.
So, NBFCs like Bajaj Finance, IndiaBulls Fiinance, etc are also eligible for this.
  • It looks like a huge benefit to me!
Not exactly. The interest is not waived off…. It will continue to get accumulated and you will have to pay the EMI Holiday 3 months interest too immediately after the 3 months of Moratorium !!


FINALLY,



Please understand that a moratorium only leads to POSTPONEMENT of your EMI payments and not Waiver as such. 
And the postponement will INCLUDE INTEREST FOR THE POSTPONED PERIOD. 
Hence, use it only under Exceptional Circumstances. 
If your financial position allows you the luxury of continuing with paying the EMI. Go ahead and do make the payment.
This will help you reduce your debt burden.  And also, in case you need, fresh loans will be easy based on your payment history.
And if you have credit card…. PLEASE PAY THE DUES….don’t extend it.
Credit card companies charge a compound annual interest rate of anywhere between 36% to 42%.
Moreover, credit card interest gets charged an additional 18% GST
I would rather say that this EMI HOLIDAY is a TRAP as it increase your INTEREST OUTGO and keep you in EMI JAIL for further 3 months.

Even for Home Loan...the EMI Holiday could become a trap in the sense, it increases your burden considerably. 
To illustrate....
Suppose 
Home Loan = 50 lakhs
Rate of Interest = 8.5%
3 months Moretorium period
Additional interest will be
50 lakhs *8.5%*3/12 = 1.06 lakhs
Your additional burden will be Rs.1,06,000/-
Avoid….unless you don’t have an alternative.
Regards,
Srikanth Matrubai



Srikanth Matrubai Author of the Amazon Best Seller DON’T RETIRE RICH
Do read my book DON’T RETIRE RICH . 
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Srikanth Matrubai Author of the Amazon Best Seller DON'T RETIRE RICH
Do read the book and give your valuable feedback and request you to post positive comments on the Amazon. https://amzn.to/3cHUM6M/ You can purchase the book on amazon and flipkart Please subscribe to my TELEGRAM channel https://t.me/MutualFundWORLD/

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