HDFC customers alert! Interest will continue to accrue during EMI moratorium period

HDFC EMI Moratorium: To help bank customers facing a financial crisis due to the late payment or partial salary payment, the RBI offered EMI moratorium to the retail loan borrowers for the three months. The Central Bank announced this offer as a goodwill gesture for the loan borrowers during the Coronavirus lockdown but people took it another way. Some of them took it as an EMI waiver while some thought it is free and there will no additional charge being levied on the EMI moratorium availed of by the loan borrowers. So, for those HDFC customers who have taken an auto loan or personal loan, the private lender has made it clear that additional interest will accrue during the three-month moratorium period.

HDFC cleared the confusion with an illustration for the additional payments to be done by personal loan borrowers citing an illustration, "Loan amount Rs. 4 Lacs, remaining tenor 48M, Last EMI on 4-Mar-24, opting for 2 months Moratorium i.e. Apr-20, May 20 EMIs. The additional interest would be about Rs. 15,000/-, and the resultant tenor would increase by 1.4 EMI, and the last instalment (40% of regular EMI) would be on 4-Jul-24."

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HDFC also gave illustration for the car loan, bike loan or any other auto loan borrowers citing, "Loan amount Rs. 8 Lacs, remaining tenor 36M, Last EMI on 7-Feb-23, opting for 3 months Moratorium i.e. Mar-20, Apr-20 & May-20 EMI. The additional interest would be about Rs. 25,500/-, and the resultant tenor would increase by four months, and the last EMI including the interest recovery would be on 7-Jun-23." 

Clearly speaking on what charges you will have to pay if you avail of the EMI moratorium the HDFC said, "If you avail the EMI moratorium, there will be a levy of interest at the contracted rate of the loan for the period of EMI moratorium on the loan outstanding. Such interest will be collected by extending the original tenor of the loan accordingly."

So, it's advisable for those who can pay the EMI should not go for the EMI moratorium.