EMI calculation: Should you pay or not? Anil Singhvi explains what home loan, auto loan, other borrowers should do

EMI calculation: Though the banks have been told to give borrowers a three-month relaxation towards payment of EMIs or Equated Monthly Installments, what should actually be done is still not clear for many. From penalty to credit score damage, many things are playing on loan takers minds. Should they pay, or should they not pay their EMIs now. Also, there are certain misconceptions that the loan takers will have to let go - many believe they will not have to pay their EMI for three months at all. The RBI governor has not said anything like this. What RBI has done is give a relaxation on the payment of EMI between 1 March and 1 May and borrowers should know that this is not a waiver. Notably, the interest component on borrowers' loans will keep on adding up.  

So, what are the rules and regulations with regards to it and should the people with an EMI liability defer payments for these months? Zee Business Managing Editor Anil Singhvi has some suggestions for you.

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To get right down to the business end of the suggestion, it will not be a right decision on borrowers part to discontinue their EMI payments. So, if borrowers are in a position to pay their EMIs, then they should do so. Why, because, it will become a big burden for them to bear in subsequent EMIs.

EMI payments should be deferred only if there is some financial crisis.

Check Calculation: Burden on You if You Defer 3 EMIs

Assume you have a loan of Rs 50 lakhs for a 10-year period at an interest of 8.5%. If you are deferring the EMI payment from 1 April, then the interest on it will be Rs 35000 and the total amount payable will be Rs 50,35,000. If the amount is deferred in May, then the interest will be Rs 36000 and the amount payable will be Rs 50,71,000. And if the EMI is deferred in June too, then the amount will become Rs 51,07,000. So the interest for deferring payment for three months will be Rs 107,000 which will be adjusted in subsequent installments.

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Quoting the loan agency officials, Anil Singhvi further said that this is a facility being given to people who have a temporary liquidity issue. It does not mean that they  will not take interests on the loan amounts.