Understanding the Personal Loan Moratorium: Essential Information You Should Have

Personal loans can be a lifesaver during times of financial need, whether it’s for unexpected medical expenses or home repairs. However, what happens when you’re unable to make your loan payments on time? In response to the COVID-19 pandemic, many countries implemented loan moratoriums to help individuals struggling to make their loan payments. In this article, we’ll discuss everything you need to know about loan moratoriums.

What is a Loan Moratorium?

A loan moratorium is a temporary pause in loan payments, usually granted by banks or financial institutions during times of economic uncertainty. During a personal loan moratorium, borrowers are not required to make any payments towards their loan, and interest may or may not accrue during this period. This can provide individuals with some breathing room and alleviate some financial pressure.

Who is Eligible for a Loan Moratorium?

Eligibility for a personal loan moratorium is typically determined by the financial institution providing the loan. In most cases, individuals experiencing financial hardship, such as job loss or a reduction in income, may be eligible for a loan moratorium. However, it’s important to note that not all loans may qualify for a moratorium, and different financial institutions may have varying eligibility requirements. Check your eligibility with Personal Loan Eligibility Calculator.

What are the Benefits of a Loan Moratorium?

The main benefit of a loan moratorium is that it provides individuals with temporary relief from loan payments, which can be especially helpful during times of economic uncertainty. This can help individuals avoid defaulting on their loans and potentially damaging their credit scores. Additionally, some loan moratoriums may also waive late payment fees or penalties, further reducing financial burden.

What are the Drawbacks of a Loan Moratorium?

While loan moratoriums can provide temporary relief, there are also some potential drawbacks to consider. One of the most significant drawbacks is that interest may continue to accrue during the moratorium period, which means that individuals may end up paying more in interest over the life of the loan. Additionally, some financial institutions may require individuals to make up missed payments at the end of the moratorium period, which could lead to larger payments down the line.

Another potential drawback is that loan moratoriums may only provide temporary relief and may not address the root cause of the financial hardship. If individuals are unable to address the underlying financial issues, they may continue to struggle to make loan payments even after the moratorium period ends.


In summary, loan moratoriums can be a helpful tool for individuals experiencing financial hardship, providing temporary relief from loan payments and potentially reducing financial burden. However, it’s important to carefully consider the eligibility requirements, potential benefits, and drawbacks before deciding to apply for a loan moratorium. Additionally, it’s important to use this period of relief wisely and take steps to address any underlying financial issues to avoid future financial hardship.


  1. What is a personal loan moratorium?

A personal loan moratorium is a temporary suspension of your loan repayment, usually offered by the lender during difficult times, such as a pandemic, natural disaster, or economic downturn.

  1. Who is eligible for a personal loan moratorium?

Eligibility criteria vary from lender to lender. In general, individuals who have taken out personal loans are eligible for a moratorium, but it depends on the specific terms and conditions of their loan agreement.

  1. How long is the personal loan moratorium period?

The moratorium period may vary, but it is usually up to six months. The specific duration depends on the terms and conditions of your loan agreement and the policies of your lender.

  1. Is interest charged during the personal loan moratorium period?

Yes, interest is charged on the outstanding loan amount during the moratorium period. However, some lenders may waive off the interest during the moratorium period.

  1. Will the personal loan moratorium affect my credit score?

No, the moratorium itself will not affect your credit score. However, if you miss any payments after the moratorium period ends, it could negatively impact your credit score.

  1. Do I need to apply for a personal loan moratorium, or is it automatic?

Most lenders require you to apply for a personal loan moratorium. You should check with your lender to determine the specific steps you need to take.

  1. What happens after the personal loan moratorium period ends?

Once the moratorium period ends, you will need to resume your loan payments. Depending on the terms of your loan agreement, you may need to make additional payments to cover the interest accrued during the moratorium period.

  1. Are there any fees associated with taking a personal loan moratorium?

Some lenders may charge processing fees or penalty fees for availing of a personal loan moratorium. You should check with your lender to determine if there are any fees associated with the moratorium.

  1. Is a personal loan moratorium the same as loan forgiveness?

No, a personal loan moratorium is not the same as loan forgiveness. A moratorium is a temporary suspension of loan repayment, while loan forgiveness is a cancellation of the loan amount owed.